Non-Disclosure Agreement (NDA)
A contract protecting confidential information shared between parties.
Definition
A Non-Disclosure Agreement (NDA) is a legal contract establishing confidentiality obligations. It defines what information is confidential, how it may be used, and the consequences of unauthorized disclosure. NDAs can be one-way (one party shares, one protects) or mutual (both parties share and protect).
NDAs are common before business discussions involving sensitive information: proprietary processes, client lists, financial data, or product plans. They enable open conversation while protecting valuable information.
Why It Matters
NDAs protect your business information when shared with potential partners, vendors, or clients. Without an NDA, there's little legal recourse if someone shares or uses your confidential information.
For client work, NDAs often go both ways—protecting client confidential information you'll access and protecting your proprietary methods. Having standard NDA terms ready speeds up new relationship setup.
Examples
- 1
A software company requires NDAs before product demos that show unreleased features, protecting competitive advantages.
- 2
A consultant signs a mutual NDA: protecting client business data and protecting the consultant's proprietary methodologies.
- 3
An NDA specifies: 3-year confidentiality period, excluding information that becomes public or is independently developed.
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