A non-disclosure agreement is a legal contract between two or more parties that signifies a confidential relationship exists between them. The confidential relationship exists because the parties share information among themselves that should not be made available to any other parties outside of those involved, such as competitors or the general public or. An Non-Disclosure Agreement may also be referred to as a confidentiality agreement.
Non-disclosure agreements often arise when two companies are about to do business together and they want to protect their interests and the details of any potential deal. In this case, the parties are restricted from releasing information regarding any business processes of the other party that are integral to that party's operations.
Non-Disclosure Agreements also may arise between an employer and an employee. If the employee has access to sensitive information about the company, he may be asked to sign a Non-Disclosure Agreement when he is hired. This provides an incentive to the employee not to release this sensitive information and avoid a costly legal headache.
Non-Disclosure Agreements also sometimes arise between a company seeking funding and an investor in the company or potential investors, as Non-Disclosure Agreements are a very common way to protect company trade secrets. This information may include a go-to-market strategy and sales plan, potential customers, a manufacturing process or proprietary software. If a Non-Disclosure Agreement is breached by one party, the other party may seek court action to prevent any further disclosures and may choose to sue the offending party for monetary damages.
1) A non-disclosure agreement is a legal contract between at least two parties that acknowledges a confidential relationship exists between them.
2) Because of the confidential nature of the relationship, a Non-Disclosure Agreement is sometimes known as a confidentiality agreement.
3) The Non-Disclosure Agreement exists because the parties share sensitive information with each other that is meant to be kept private from other parties, including competitors or the general public.
4) Violating a Non-Disclosure Agreement represents a legal breach. Anyone violating the agreement may be subject to fines or other repercussions.