Definition of Confidential Information NDA

The definition of a confidential information nda is a legal contract that prevents one party from sharing another's confidential business information.3 min read

The definition of a confidential information non disclosure agreement is a legal contract that prevents one party from sharing another's confidential business information.

Non-disclosure Agreement (NDA)

A non-disclosure agreement (NDA), also known as a confidentiality agreement, is an agreement between two people that prevents either party from sharing confidential information. When signing an NDA, you are agreeing you will not share any confidential information with others. NDAs are usually broken up into two different types:

  • Unilateral: In this agreement, one party signs a contract stating that they will not share confidential information. This type of agreement is usually between an employer and an employee or a client and a vendor.
  • Mutual: In a mutual agreement, both companies agree not to share confidential information. This type of NDA is less common but is used when two companies are considering working together.

The goal of an NDA is to prevent a business's intellectual property or secrets from becoming known to the public.

Purposes of An NDA

NDAs may be signed either when hiring a new employee or after an employee has decided to leave the business. NDAs serve the following purposes:

  • Keep sensitive information confidential: An NDA is a legal promise that all confidential information will remain confidential.
  • Maintains patent rights: Public knowledge of inventions can make it difficult to obtain a patent on a product. An NDA can protect an inventor and their ability to patent a product.
  • Defines what terms are confidential and which are not: It can be difficult to know exactly what a business wants to remain confidential. An NDA can clearly define the aspects of the business that should not be shared.

Important Elements of a Legal Non-disclosure Agreement

In order for an NDA to be legally enforceable, it should include the following elements:

  • The purpose of the NDA: An NDA should not only include the aspects of the business that should remain confidential but also why they need to be kept confidential.
  • Length of the NDA: A specific time limit should be set on an NDA. In most cases, NDAs are set between four and five years, but this timeline can be extended for more confidential of information.