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Home Law

What is NDA Example?

by Miles Austine
in Law, Tips and Tricks
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A non-disclosure agreement (NDA) is a definition of a legal contract that establishes a confidential relationship. Any party or parties who sign such a concur that the confidential information they become acquainted with will not be available to others. Basic information:

  • agreement between two or more people to keep certain information between them private;
  • It is customary to sign one prior to negotiations between companies in potential joint ventures;
  • nda agreement could be called a confidentiality agreement;
  • there are reciprocal and non-reciprocal non-disclosure agreements.

The agreements allow parties to exchange confidential information without having to worry about it being disclosed to outsiders.

Understanding Secrecy Agreements

Such an agreement is used in a wide range of Contexts. It is usually needed when two companies are negotiating to do collaboration in business although each party is keen to guard interests. In this case, the NDA prohibits the disclosure of any information related to the business. 

In some companies, you may observe that fresh hires are required to sign a non-disclosure agreement if they have access to confidential information. It may also be mandatory for all employees. 

Often an NDA is used between companies before negotiations if the company is looking for funding or has a potential sponsor. When this occurs, it is intended to be used to avoid the dissemination of trade secrets. It is worth mentioning that many investors do not agree to sign such an agreement. This will be a barrier to making deals with other companies in the future. 

There are nda agreement templates that are available in various programs. A company can use them to draw up an agreement according to its requirements. The information to be protected may be different. For example:

  • marketing strategy;
  • sales plan;
  • potential customer base;
  • production process;
  • software.

If one of the parties breaches the non-disclosure agreement, the other party has the right to take legal action.

Types of Non-Disclosure Agreements

There is a mutual agreement when two companies discuss a possible joint partnership. During the strategy discussions, each company discloses certain information so that the other party is aware of its options. In this case, both parties agree not to reveal confidential information to which they are privy during the negotiations.

There is also a non-reciprocal agreement. Here, though, it applies to new employees of the company who have access to confidential information. The employee is a single party who signs the agreement and cannot share confidential information. One party pledges to maintain confidentiality.

There is also a disclosure agreement. Often people are asked to sign the opposite of a non-disclosure agreement. Such an NDA sample is used in different cases. Let’s look at a medical example. A doctor may require a patient to agree that their data will be shared with their insurance company. A breach of such an agreement may result in legal sanctions.

Basic Requirements for NDA

Basically, the NDA agreement between employee and employer can be adapted to any situation. There are different elements that are considered important in drafting any non-disclosure agreement:

  1. The parties to the agreement. It is specified in each agreement who is involved. It can be a specific individual or all employees of a particular company. The company must correctly identify itself in the NDA. It must define which legal entity owns the information. 
  2. Identification of confidential information. This is one of the most difficult points as the information that is confidential must be properly and clearly defined. The difficulty is that this information is not disclosed as part of the NDA. 
  3. Confidentiality exemptions. There are situations where it is easy to define information that is not confidential. In such an agreement, the company states that all information that is given to the rival party must be confidential.
  4. Appropriate use of the information. There are times when a company declares that no information can be confidential. This can limit the use of external information. For example, a company discloses certain information to another party, but it cannot use that information for personal gain. 

The company may use a specific NDA template, given the particular information to make an agreement.

Advantages and Disadvantages of Having an NDA

The main advantage is that confidential business information will be kept secret. This is an excellent way to protect personal information from disclosure. In an NDA all agreements are clear and straightforward. They specify what information must not be disclosed to avoid trouble. 

You can create such an agreement at a low cost as it is simply a signed document and one of the best ways to store personal information. Different software has ready-made templates that you can customize. Pandadoc, for example. 

The agreement outlines the consequences of disclosing confidential information. In this way, you can maintain trust in the business relationship. Key benefits:

  • information is kept secret;
  • the price is low;
  • consequences are described.

There are also some disadvantages:

  • creating mistrust;
  • risk of frightening high-profile new professionals;
  • negative impact on partnerships.

A company has to look after its own safety and development first and foremost. There is nothing wrong with new employees having to sign a confidentiality agreement.

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