A non disclosure agreement is a document or an agreement between at least two parties whereby they agree to share confidential information, material or knowledge for certain purposes but restricts disclosure to the third party. In simple words, it is a contract through which the parties involved can restrict the disclosure of any confidential information of a company mentioned in the agreement to the outside world. There are several other names for Non Disclosure agreements (NDA) like confidentiality agreement (CA), confidential disclosure agreements (CDA) or secrecy agreement (SA). The main reason behind this to protect the interest of the business by not disclosing confidential information or data. The non disclosure agreement binds the two parties legally and its breach may lead to severe consequence such as imprisonment.
One of the most common examples of the non disclosure agreement is employees and employer confidentiality agreement.
Types of Non-disclosure Agreement
Generally, the non-disclosure agreement is of two types:
One way agreement or unilateral agreement
As per this agreement, only one party has confidential information to share with the other party. Under this agreement, the party disclosing the confidential data is known as disclosing party. On the other hand, the party receiving such information is knows as a receiving party.
Two-way agreement or bi-lateral agreement
The bilateral agreement is a contract between two parties wherein both the parties involved in the contract have the confidential information to share with each other.
Clauses Include in a Non-disclosure Agreement
Normally, a non disclosure agreement has the following clauses:
Confidential Information: This clause specifies what confidential information shall be exchanged and protected between the parties.
Disclosure of Confidentiality: The disclosure of confidentiality clause states the name of the person with whom the confidential information has to be shared.
Term of the contract: This clause of the agreement includes all the terms and condition relating to the contract such as agreement date and the duration of the contract. Further, it can also specify whether obligation regarding the disclosure will apply after the expiry of the duration of the contract.
Remedies: This clause in the non-disclosure agreement provides solutions that can be adopted if there is any dispute between the parties or in case of breach of contract.