A Non-Disclosure Agreement aims to prevent confidential information from being disclosed publicly or otherwise used by any parties you share information with.
A signed NDA sets out the legal framework to protect intellectual property and information from being stolen, sold, or shared with third parties, such as business competitors.
An NDA is typically used to:
To protect sensitive information – If you or your company need to protect sensitive data, you can use an NDA, so participants are legally bound to not divulge or release the information to other parties.
Protect patent rights – If you intend to share trade secrets, you need to take reasonable steps to protect their confidentiality. An NDA is an appropriate step.
Outline what information is considered confidential – To avoid any confusion, an NDA classifies exclusive and personal information.
Examples of situations when an NDA is used by a company:
In-depth business discussions
Hiring employees, freelancers, or contractors
Working with potential investors
Supplementing other agreements (such as a manufacturing agreement)
How to Write a Non-Disclosure Agreement: Common Clauses
You may want to fill in or write your Non-Disclosure Agreement. Here are the standard clauses you should include and what they mean:
Step 1 – Disclosing and Receiving Parties
Start your NDA by establishing the “Parties to the agreement. The “Disclosing Party is the individual or entity sharing information. At the same time, the Receiving Party is the individual or entity receiving information.
In a mutual NDA (also known as a bilateral NDA), confidential information is shared both ways. In this agreement, both parties serve as the Disclosing and Receiving Parties.
Heres an example of how to start an NDA and establish the Parties to the agreement. Notice that the sample NDA clause also specifies what transaction or relationship the NDA relates
