What Is a Non-Disclosure Agreement?

A Non-Disclosure Agreement (NDA), also known as a Confidentiality Agreement, is a contract between two parties that places valuable information under protection.

A Non-Disclosure Agreement:

• Describes the ideas, data, and operations an individual or business wants to protect
• Specifies how long the obligations of non-disclosure are in place
• Sets out rules against competition and solicitation

Who Should Use a Non-Disclosure Agreement?

A Non-Disclosure Agreement is typically created when the disclosing party (an individual or business) doesn't want valuable information to be exposed by the receiving party
(an employee, consultant, or business partner).

This type of contract is particularly useful to:

• Employers whose employees or consultants have access to confidential company information
• Business owners who are disclosing proprietary information to potential buyers, partners, or investors
• Inventors who are sharing ideas and other sensitive information with evaluators or investors

Why Is a Non-Disclosure Agreement Important?

Creating a written agreement can benefit both the disclosing party and the receiving party.

For the disclosing party, such as an employer, an NDA:

• Clearly describes what information they want to protect, as well
  as the terms of non-disclosure
• Provides evidence that an agreement was in place, should the receiving party expose confidential information

For the receiving party, such as an employee, an NDA:

• Specifies what information is considered confidential
• Puts the terms of non-disclosure in writing, and can be referred
  to if a misunderstanding occurs

How Do I Write an NDA?

Your Non-Disclosure Agreement should contain the
following information:

Reason for the contract, such as:

• Employment
• A potential sale
• A new invention

Categories of protected information, including:

• Product design and production
• Software and technology
• Marketing and development
• Accounting records
• Client data
• Intellectual property

Information on the Signing Parties:

• Contact details
• Location

Length of the Contract:

• 1, 2, or 5 years after the business relationship ends
• Indefinite

Is a Non-Disclosure Agreement Legally Binding?

A Non-Disclosure Agreement is generally enforceable so long as its terms aren't:

• Overly broad
• Excessively long in duration
• Too demanding for the receiving party
• Against public interest