Non-Disclosure Agreement

(NDA)

What is NDA?

NDA is a legally enforceable form of written agreement entered into between the parties for non-disclosure of each other’s confidential information. The use of NDA is a very common business practice nowadays to ensure that the company’s most valuable assets are adequately protected.

Applicability of NDA

It is necessary to understand that there exist a very thin line of difference between the ordinary information and the confidential information. The NDA is made only with respect to the confidential information and not the ordinary information. The following points exclude the applicability of the NDA:

  • When the recipient of the information is already aware of the same.
  • When the information shared is already available in the public domain.
  • When the information is released in compliance or regulation of the Government orders.

Why is it necessary?

For a business some information might be confidential such as those relating to trade secrets, processes, operations, style of works, or apparatus, or to the production, sales, shipments, identification of customers etc. which cannot be made open to the public. Release of such information could adversely harm the business, its partners as well as the clients. Therefore, it is necessary for a business to maintain some confidentiality. However, at the same time the business cannot operate in isolation, it has to enter into ties-up with various other businesses to carry on its operations smoothly. It is here where the need of a Non-Disclosure Agreement (NDA) arises.

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What are the types/kinds of NDAs?

  • One way NDA:

When only one of the parties to the agreement is delivering the confidential information and the other party is merely at the receiving end.

  • Two way NDA:

It is when both the parties to the agreement are delivering the confidential information relating to their respective businesses. Here both the parties promise not to disclose or use each other’s trade se secrets. It is also known as Bi-lateral NDA.

  • Multi-lateral NDA:

It is where more than two parties are involved in sharing or receiving the information.