Any legally binding document between two or more parties that outlines confidential material and information that the parties share with one another but wish to restrain access to a third party is commonly referred to as a Non-Disclosure Agreement. A NDA creates a mutual relationship between the parties as protection for any type of trade secret(s), or proprietary information.

A NDA, used to protect any information that is not generally known in the public sphere, has multiple uses and applications depending on what is important to the parties involved, e.g. when two companies, or two entities are considering doing business together and need to understand the potential partner’s business processes and to evaluate the likelihood of the business relationship.

NDA’s are also considered ‘mutual’ in the sense that both parties are restricted in the usage of the information between them, or restriction of information by just one party.

Some common features in most NDA’s are:

  • who are the two parties with poignant clarity and detailed information
  • what is considered to be confidential
  • how long is the binding period for disclosure (anything that is more than a year after signing is usually not considered as confidential)
  • the law and legally mandated jurisdiction governing both parties including the provisions that restrict data transfer in light of national security
  • the obligations regarding the usage of the confidential information and the permissible disclosure types that may be required by court order or the law

A Non-Disclosure Agreement could be unilateral or bilateral, that is, it may bind a single party or two or more parties or entities to work within the confines of the agreement. In a unilateral agreement only one of the party requires the data to remain confidential for a stipulated time, while a bilateral agreement entails both parties furnishing information that is intended to remain need-to-know.

All in all, NDA’s are a surefire way of restricting information to third parties without express permission and make the business process more professional.