Non-Disclosure Agreement

A non-disclosure agreement (NDA) is an agreement where one or both parties agree to keep the information of the other confidential. They are often used during preliminary discussions regarding a contract or transaction.

NDAs come in two forms, depending on whether only one or both parties will be sharing confidential information:

• one-way NDAs where one party must keep the other’s information confidential
• mutual NDAs where each party must keep the other’s information confidential

The main considerations of an NDA are:

• definition of confidential information - although general definitions are often used, it is important to consider the nature of the information that will be exchanged in order to ensure it will be included in the definition
• what the receiving party is permitted to do with the disclosing party’s confidential information - generally this is limited to using the information for the purposes of the contract or transaction
• where the receiving party is a corporation, it is typically permitted to disclose the information to its employees on a need-to-know basis
• whether to include a non-solicitation provision which would prevent the receiving party to solicit the disclosing party’s employees and/or customers