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Non Disclosure Agreement

Non Disclosure Agreement is a contract or agreement between two or more people to not disclose any confidential information.

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What is Non Disclosure Agreement?

Non disclosure agreement is also known as a confidentiality agreement. It is a confidential document, being a legal contract between two parties which outlines confidential material, knowledge, information which parties wish to share with one another for certain purposes, also restrict access to or by third parties. Non disclosure agreement is an agreement through which the parties agree not to disclose information covered by the agreement.

This creates a confidential relationship between the parties. It is often signed when two companies, individuals, or other entities (partnership, society etc.) are considering doing business together. It creates a confidential relationship between the parties who through this contract “agree” to not “disclose” the shared information, hence the term “Non-disclosure agreement”.

Why Non-Disclosure Agreement is required?

A non disclosure agreement is done to protect certain information that is generally not known and has some significance to the owner of that information.

For example, certain companies or institutes working on their projects or institutes person research studies are restricted to be disclosed to anyone other than the people involved; here a non disclosure agreement is in use. Usually Non-Disclosure agreement is utilised in science, genetics, research and development.

Another example would be specific recipes used by certain restaurants or food and Beverage Company; the employees are under non disclosure agreement to not reveal their secret contents and procedures. In some cases, where legal disputes are sorted with the settlement, here both parties often sign a non disclosure agreement relating to the terms of the settlement.

What are the kinds of Non Disclosure Agreement?

The following are the kinds of Non Disclosure Agreement:

What are the kinds of Non Disclosure Agreement?
  • Unilateral Non-Disclosure Agreement
  • Bilateral Non-Disclosure Agreement
  • Multi-Lateral Non-Disclosure Agreement
  • Unilateral will involve two parties, the knowledge owner and the one that agrees to not disclose the information. Usually this form of agreement would between two or more parties. A typical example of this form of confidentiality agreement would be an agreement between an employer and employee to not disclose any confidential information.
  • Bilateral is the type where two parties involved will both share information that is other is bound to not disclose. For example this will involve parties in a Venture Capital Agreement where both the information of the parties is confidential. Even collaboration agreements would have this form of information.
  • Multilateral involves as the name suggests multiple parties. If there are multiple parties in the agreement, then such agreement would be a multilateral confidentiality agreement.

Highlights of a Non Disclosure Agreement

A Non disclosure agreement may or may not contain a clause which shall protect the person receiving the confidential information so that if they legally obtained the confidential information by means of other sources they wouldn't be obligated to keep the information confidential. Another aspect is that they cannot be enforced if the activities involved are felonies, where the contract is for illegal activities like gambling or drug trafficking, in such situations no enforcement from the law for a non disclosure agreement will be valid.

Advantages of Non Disclosure Agreement

The following advantages can be secured by having a well drafted confidentiality agreement:

Advantages of Non Disclosure Agreement
  • Protection of Data
  • Privacy
  • Can sue if Breached
  • Protection of Information

    All information in a confidentiality agreement is protected.

  • Privacy

    One of the main intentions of a non disclosure agreement is to reduce the breach of privacy between the parties. By having a well drafted confidentiality agreement, the parties’ privacy would also be safe.

  • Can Sue if Breached

    Confidentiality or Non-Disclosure Agreement is a contract between two or more parties. Hence if the information is breached then the aggrieved party has the right to sue the other party.

What are the main contents of a Non-Disclosure Agreement?

The following are the clauses to be included in the confidentiality agreement:

What are the main contents of a Non-Disclosure Agreement?
  • Parties of the Agreement
  • Brief Background of the Agreement
  • Definitions
  • Confidential Information as per the Agreement
  • Permitted Use of Confidential Information
  • Exceptions to Confidentiality
  • Return of Information
  • Other Provisions
  • Parties of the Agreement

    First and foremost the parties of the agreement must be included in the confidentiality or non-disclosure agreement. This will include all the parties in the NDA.

  • Brief Background of the Agreement

    This will include what the agreement has. The information present in the agreement also would be mentioned here. Confidential information would also be mentioned here.

  • Definitions

    Here the confidential information, timeline and other information would be defined. Such information which is provided must be conclusive to the entire agreement.

  • Confidential Information as per the Agreement

    Here confidential information as per the agreement must be mentioned. If the information is regarding some invention or some form of trade secret then the same must be mentioned. The date of entering the agreement and confidential information also must be mentioned.

  • Permitted Use of Confidential Information

    Here all the permitted use of the confidential information must be mentioned. As soon as the recipient receives the confidential information steps have to be taken to preserve such information. Here the recipient would not disclose any form of confidential information to a third-party. If the recipient is disclosing such information to an advisor, then such information can only be disclosed if the information is utilised by the recipient for the commercial purposes without breaching any terms. Apart from this, the recipient must not exploit any information which is provided.

  • Exceptions to Confidentiality

    However, the agreement would have specific amount of exceptions related to confidentiality. This would be if the information is already present in a public domain or there is some form of common knowledge related to the information.

  • Return of Information

    Such clause would deal with the return of information when the use of confidential information is complete. This clause would deal with the method of returning the confidential information.

  • Other Provisions

    Other provisions such as the interpretation clauses must also be present in the confidentiality agreement. Apart from this there will be a clause dealing with breach of confidential information. The remedies related to the breach of information would also be mentioned to the aggrieved party.

How effective is a Non Disclosure Agreement?

Numerous organizations and business people depend on non disclosure agreement to secure their competitive ideas, intellectual property, financial data, unpublished patent applications, forms or other materials. For instance, assume you are building up a prototype of a new item that will make you a little fortune. In any case, you have to connect with an advisor to prompt you one specific part before you can finish the model. You may solicit the advisor to sign your non disclosure agreement to guarantee he or she doesn't uncover your secret data to your rivals. As we all are aware that these are legal contracts and are valuable. If any dispute occurs you can ask the court to settle the dispute and make the correct decision.

When to use Non Disclosure Agreement?

Envision that you possess an innovative organization which represents specialization in a network installation. You are bidding on an extremely lucrative contract which is of government. You must be aware that few other organizations are also providing the similar contract and the competition will be solid. You need your proposition report to be extraordinary, so you contract with an expert proposal writer to set up your document.

You will give this writer the required data so that she can compose the sort of report that will fix you a meeting. Since she is a self-employed contractor, and you understand the fact that she has contacted with your opposite parties as well. In the event, that she uncovers the idea of your offer, either coincidentally or purposely, your rivals will utilize your data for their advantage. At this moment the need of non disclosure agreement occurs.

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Frequently Asked Questions

A non disclosure agreement is also known as a confidentiality agreement. Usually this agreement is entered between two or more parties to not share any confidential information.

The following are the types of non disclosure agreement:

• Unilateral

• Bilateral

• Multilateral.

The main purpose of a confidentiality agreement is ensure that confidential information is private between the parties.

If there is a breach of the confidentiality agreement, the aggrieved party can sue the other party for breach of contract.

Yes all types of intellectual property would come under the ambit of confidential information.

The provider of the information and the recipient of the information are the parties in a confidentiality agreement.

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