What is a Non-Disclosure Agreement?
A Non-Disclosure Agreement (NDA), also referred to as a confidentiality statement or clause, is a document that offers protection to people engaged in a business relationship where confidential information is shared.
It works by providing protection to the person who divulged the information should it be shared or communicated to an individual or business that is not entitled to it.
What Can I Use a Non-Disclosure Agreement For?
An NDA can be used for the following types of information:
Employment: When disclosing business, client, or trade information to an employee or a consultant.
Business Deals: When purchasing or selling a business, information relating to employees, trade secrets, clients, and other information pertaining to it (such as profits and losses), is disclosed to a buyer or seller.
Inventions: When inventions such as products, recipes, or designs are communicated as part of a professional relationship.
Non-Disclosure Agreements can also be used to protect other types of information between parties as well.
Types of Confidential Information
In a Non-Disclosure Agreement, you can choose to protect the following types of information:
- Customer Information
- Intellectual Property (including computer technology)
- Marketing, Product, and Service Information
- Business Operations and Accounting Information
What is Included in a Non-Disclosure Agreement?
NDAs include information about:
- The parties involved;
- Time restrictions for how long the confidential information must not be communicated to other parties;
- Details about what may not be shared with other parties;
- The obligations of a Non-Disclosure Agreement;
- Ownership and return information;
- and signing information.
Do I Need a Non-Disclosure Agreement?
You may need a Non-Disclosure Agreement if you:
- are buying or selling a business
- are an employer that needs to protect sensitive information
- are an inventor involved in a business relationship
- are an employer hiring a temporary contractor or freelancer and wish to ensure that any shared information is kept safe