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What Is a Nondisclosure Agreement?

A nondisclosure agreement (NDA) occurs when one party or both parties to the agreement promise not to reveal any confidential information that the other is giving to them during the transaction. This is commonly used in employment contracts, where the employee promises not to reveal any confidential information obtained during the course of employment to outside sources. The purpose of the NDA is essentially to establish a confidential relationship between the employer and the employee that can easily be proved in a court of law.

What Is Included in a Nondisclosure Agreement?

The basic elements for a nondisclosure agreement are:

  • Defining confidential information - NDAs will specifically define what information is considered confidential. This helps to define the boundaries of what the agreement covers.
  • Exclusions from confidential information - Any information which a party is unable to protect under the law is excluded. For example, a party cannot protect any information that was already independently and legally gained by the other party before the NDA was created.
  • Obligations of the signing party - This illustrates the duties of the employee under an NDA. Essentially, it states that the employee cannot disclose confidential information to others or make other employees disclose confidential information. Usually these obligations are enforceable under state law.
  • Time periods - The disclosure may be limited by a certain time period. The length of time may vary depending on the type of contract. For example, two companies sharing information may cap the time limit for nondisclosure to around 5 years, while the time period in an employment contract may be open-ended.
  • "Boilerplate" terms - Generally includes what will be the penalties for violating the agreement, as well as the procedures for any dispute in the agreement.

What Should I Do If I Have Been Accused of Violating a Nondisclosure Agreement?

Make sure to read over the NDA you signed again so as to understand what you are being accused of and to ascertain what procedure will be used to resolve the dispute. You may want to consult an employment attorney who has experience dealing with NDAs and employment contracts if you signed the agreement as a stipulation to employment. Your attorney can help interpret the nondisclosure agreement and find potential defenses as well as help you navigate through the legal procedure set out in the NDA.

Photo of page author Adam Vukovic

, LegalMatch Legal Writer

Last Modified: 03-05-2015 12:01 PM PST

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