Non-disclosure agreement

A non-disclosure agreement ( NDA), also known as a 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 that the parties wish to share with one another for certain purposes, but wish to restrict access to. Examples of NDAs include doctor–patient confidentiality, attorney–client privilege, priest–penitent privilege and bank–client confidentiality agreements, which are often not enshrined in a written contract between the parties.

It is a contract through which the parties agree not to disclose any information covered by the agreement. An NDA creates a confidential relationship between the parties, typically to protect any type of confidential and proprietary information or trade secrets. NDAs are commonly signed when two companies, individuals, or other entities are considering doing business and need to understand the processes used in each other's business for the purpose of evaluating the potential business relationship. NDAs can be "mutual", meaning both parties are restricted in their use of the materials provided, or they can restrict the use of materials by a single party. An employee can be required to sign an NDA or NDA-like agreement with an employer, protecting trade secrets.

General types

A non-disclosure agreement (NDA) may be classified as unilateral, bilateral, or multilateral:

Unilateral

A unilateral NDA, sometimes referred to as a one-way NDA, involves two parties where only one party (i.e., the disclosing party) anticipates disclosing certain information to the other party (i.e., the receiving party) and requires that the information be protected from further disclosure for some reason.

Bilateral

A bilateral NDA (sometimes referred to as a mutual NDA, MNDA, or a two-way NDA) involves two parties where both parties anticipate disclosing information to one another that each intends to protect from further disclosure. This type of NDA is common for businesses considering some kind of joint venture or merger.

Multilateral

A multilateral NDA involves three or more parties where at least one of the parties anticipates disclosing information to the other parties and requires that the information be protected from further disclosure.

Content

An NDA can protect any type of information that is not generally known. Some common issues addressed in an NDA include:

• outlining the parties to the agreement;
• whether confidential information must be labeled as confidential;
• the definition of what is confidential (i.e., the information to be held confidential);
• the disclosure period;
• the exclusions from what must be kept confidential;
• provisions restricting the transfer of data in violation of laws governing export control and national security;
• the term and conditions (in years) of the confidentiality;
• permission to obtain ex-parte injunctive relief;
• types of permissible disclosure;
• the law and jurisdiction governing the parties.

Abuse of NDAs

While the purpose of NDAs is to prevent disclosure of confidential information, they are often misused by powerful companies to prevent employees who have been abused or discriminated against from disclosing the fact, usually in return for payment. There have been high-profile cases linked to the #MeToo movement, and many cases involving workers in regular employment, who do not have the financial means or confidence to challenge their employers' "gagging orders".

Law and practice by jurisdiction

Australia

Deeds of confidentiality are commonly used in Australia. These documents generally serve the same purpose as and contain provisions similar to NDAs used elsewhere.

India

NDAs are used in India and have been described as "an increasingly popular way of restricting the loss of R&D knowledge through employee turnover". They are often used by companies from other countries outsourcing or offshoring work to companies in India.

United Kingdom

In the UK, NDAs are often used as a condition of a financial settlement in an attempt to silence whistleblowing employees from making public the misdeeds of their former employers.

United States

NDAs are very common in the United States, with more than one-third of jobs in America containing an NDA. Researchers estimate that between 33% and 57% of U.S. workers are constrained by an NDA or similar mechanism, with specific laws governing their use.