A Non-Disclosure Agreement (NDA) also known as Confidentiality Agreement (CA), Confidential Disclosure Agreement (CDA), Proprietary Information Agreement (PIA) or Secrecy Agreement (SA) is a legal contract or part of a contract between at least two parties that outlines confidential material, knowledge or information which the parties wish to share with one another for certain purpose, but wish to restrict access to.

NDAs are important legal framework or structure used to protect sensitive and confidential information or other non-public business information from being made available to third parties or the public by the recipient of that information.

It is a contract through which parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties, typically to protect any type of confidential and proprietary (branded/novel/exclusive) information or trade secrets (such as formulas, methods, recipes or manufacturing information).

NDAs can either be written or non-written (implied). Doctor-Patient confidentiality, Lawyer-Client privilege, Banker-Client confidentiality agreements, etc. are examples of implied Non-Disclosure Agreements.

The penalties for breaking an NDA are contained in the agreement and may include damages. Some NDAs have time limits, while others are in effect indefinitely. Note however, that NDAs cannot be enforced if the contractual activities are illegal.

If you have worked hard to create an idea, you definitely do not want that idea to be stolen by anyone. The entire purpose of an NDA is to protect your ideas or work from being hijacked by another party. An NDA allows you to have conversations with business partners, investors, employees, contractors, etc. without the fear and risk of giving away your trade secrets.

For startups and entrepreneurs, using an NDA is one strategy to help manage and legally protect confidential information. NDAs are commonly signed when two companies or individuals are considering doing business and need to share some kind confidential information to evaluate the potential business relationship. They can also be used when outsourcing for work – for example, a company can ask a freelance writer to sign an NDA that states that all information gathered while writing, and the writing itself, is confidential information until the company chooses to use it; or where a company has to share passwords or other private details with a freelance social media manager.

There are many situations that require a Non-Disclosure Agreement to be put in place, some of these are:

  1. When you are discussing the sale or licensing of a product or technology.
  2. When employees have access to confidential and proprietary information.
  3. When you are presenting an offer to a potential partner or investor.
  4. When you are receiving services from a company that has access to sensitive information.
  5. When you are sharing business information with a prospective buyer.

A Non-Disclosure Agreement is essential for a business to maintain a competitive edge. if you ever need to keep information, new products, new ideas, etc. from leaking to the public or your competitors, then a non-disclosure agreement is a must-do.


If you are developing a new product, starting a new business idea, hiring a freelancer, developing something for sale, you would need to hire people, get investors or partners. You do not want those you’re working with to steal your idea/work, do you? Imagine if the manufacturers working with a company like Apple didn’t sign an NDA, they could easily make generic products, sell those products out themselves. This would cost Apple billions of dollars in sales. The same is true for any type of business development. An NDA is a great way to keep your important business information as confidential as possible.

Hence, you or your business needs an NDA to:

  • Prevent another person from revealing specific information such as trade secrets, exclusive knowledge, client lists, product information, strategic plans, or even business proposals and plans, etc.
  • Prevent someone from using confidential information gathered from communications or conversations in a business discussion to make undue profit.
  • Specify that certain items discussed in the course of business belong to, were created by, or were developed by one of the parties.
  • Guard against the potential for an angry employee or former employee to engage in sabotage by divulging confidential information or valuable trade secrets to competitors.

If you would like to discuss with us on whether or not you need a Non-Disclosure Agreement, contact us here.



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