Non-Disclosure Agreement Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Non-Disclosure Agreement, written in plain English, along with examples of how it is used.

What is Non-Disclosure Agreement?

Two parties agree that one of the parties will not divulge confidential information that the other party shares.

History and Meaning of Non-Disclosure Agreement

A non-disclosure agreement (NDA) is a legal contract in which two or more parties agree not to share confidential information that is shared between them. NDAs are commonly used in business settings to protect intellectual property, trade secrets, and other confidential information. The purpose of an NDA is to protect sensitive information from being leaked to competitors or the public.

The history of NDAs is difficult to trace because confidentiality agreements have been used in various contexts for many years. However, the modern concept of an NDA began to take shape in the mid-20th century as the U.S. government sought to control the spread of sensitive information during the Cold War. Since then, NDAs have become increasingly common in business and legal settings.

Examples of Non-Disclosure Agreement

  1. An employer may require employees to sign an NDA to keep trade secrets and other confidential information confidential.

  2. A startup may ask investors to sign an NDA to protect its confidential business plan while seeking funding.

  3. Companies entering a joint venture may sign an NDA to protect confidential information shared between them.

  4. A freelancer who signs an NDA with a client agrees not to share proprietary information about the client's business with anyone else.

  5. A party in a lawsuit may be required to sign an NDA as part of a settlement agreement to keep the terms of the settlement confidential.

Legal Terms Similar to Non-Disclosure Agreement

  1. Confidentiality agreement: A more general term that refers to any agreement in which the parties agree to keep certain information confidential.

  2. Trade secret: Information that a company keeps secret to maintain a competitive advantage, such as customer lists or manufacturing processes.

  3. Proprietary information: Information that is owned by a company and is not available to the public.

  4. Non-compete agreement: A contract in which an employee agrees not to compete with their employer or work for a competitor after leaving their job.

  5. Intellectual property: Intangible property that is created by the human mind, such as patents, trademarks, and copyrights.