What is a Non-disclosure Agreement?

A non-disclosure agreement (NDA) is an agreement between (at least) two parties, where one is the provider of the information that is to be protected and another is the receiver of the information. The non-disclosure agreement works on a very simple principle; it creates a legal obligation on the receiver of the information not to disclose it to anyone else outside the terms of the contract. In case the receiver discloses any information to a third party (only for the purposes of the contract), he has to ensure that such third party agrees in writing to receive such information under terms at least as restrictive as those specified in the original agreement. The point is, the person who is receiving the information is promising not to tell anyone else what has been told to him in confidence.

Any business carries out transactions with other individuals or businesses where they need to share trade secret, information received from clients that are confidential or market data that they want to keep far away from competitors. All such information requires protection. It is important that the employees of the corporation or anyone involved in the business dealings of the company do not divulge confidential information relating to the company’s activities.

How can a business corporation ensure that their trade secret and business transaction data are protected and not divulged by anyone involved in the company’s dealing? A prudent business corporation generally makes its employees and business associates sign a non- disclosure agreement to ensure confidentiality of its business dealings and trade secrets. Read on to know more about this ubiquitous Non- Disclosure Agreement.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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