What is a Non-disclosure Agreement?

A non-disclosure agreement (also known as NDA) is an agreement entered between two contracting parties namely: disclosing party and receiving party, who wish to share confidential information to each other.  The NDA as a legal document is being executed to prohibit the receiving party from divulging such confidential information to any third person, otherwise, damages or any right of action may be claimed by the disclosing party.

Non-disclosure agreements are utilized in employment contracts, independent contractorship agreements, and business opportunity transactions, whereby the receiving party is authorized to receive proprietary information from the disclosing party.  Such proprietary information may include contact information of clients, marketing plans and business plans which cannot be known to outside competitors, trade secrets, marketing and business proposals, intellectual property or inventions that cannot be made public in the meantime.

Executing a non-disclosure agreement is the modern trend so as to protect the interest of the disclosing party from loss of revenues due to the disclosure or theft of proprietary or confidential information which may be claimed by competitors or any interested persons.

The following are the usual items contained in a non-disclosure agreement:

• The parties to the agreement, including their addresses or contact information; 
• Coverage of the confidential information that cannot be disclosed to third persons; 
• Information which is excluded from the coverage; 
• Obligations of the receiving party regarding the use of the confidential information ;
• Circumstances where disclosure of confidential information is permitted (i.e. court order, or order from the proper governmental agency); 
• The duration of the confidentiality, the law governing the confidentiality, and the venue of action in case of breach.