What is a Nondisclosure Agreement (NDA)?
A nondisclosure agreement (or NDA) is simply a business contract to keep certain information confidential and not to share that information (or disclose it) to third parties. NDAs can be “one-way” where one party is sharing confidential information with another, or “mutual” where both parties are sharing confidential information with each other.
What is the purpose of a Nondisclosure Agreement?
NDAs are used by businesses of all sizes to protect confidential and proprietary information. Our small business clients use NDAs to protect information about their business that shouldn’t fall into the hands of others. For example:
Should my business require our employees or independent contractors to sign an NDA?
Many employers require employees and independent contractors to sign nondisclosure or confidentiality agreements. If your staff will have access to confidential or proprietary information, then an NDA or confidentiality agreement will prohibit the worker from disclosing or misusing that information. For example, you probably don’t want your customer or client list or information about your unique business processes and procedures to fall into the hands of your competitors. A nondisclosure agreement would prevent your employees from sharing this information with anyone outside the company and would require your employees to follow your procedures for protecting this information. Learn more about Protecting Company Secrets.
How long does an NDA last?
Typically, the confidentiality requirements in an NDA last indefinitely. Even if the parties to the NDA decide to go their separate ways, they are still expected to keep any confidential information that was disclosed under the NDA confidential. However, the information might lose its confidentiality if it ever becomes publicly available for reasons other than a breach of the nondisclosure agreement or if a court orders disclosure of the information.