What is an NDA? A Non-Disclosure Agreement (NDA), also referred to as a Confidentiality Agreement is a legally enforceable agreement in which parties agree on the type of information, documents or details that are to be considered confidential and secret.
The parties agree not to disclose these information, documents or details to others to protect their intellectual property, brand, customers, and operations model, financial information etc. An NDA could be mutual or one-sided.
In a mutual NDA, both parties disclose information, and confidentiality obligations are made and binding on both parties.
For a one-sided NDA, only one party discloses information and the receiving party will make binding confidentiality obligations. Any information can be protected using an NDA so long as both parties agree for such information to be protected. The confidentiality obligation of the NDA may be express or implied depending on what the parties to the NDA agree.
Some parties will agree that only information expressly stated to be confidential is protected by the NDA whilst in some NDAs, the parties agree that any information relating to the contemplated transaction will be assumed to be confidential.
Usually, an NDA creates some exclusions and allows information to be disclosed to certain people such as g the legal or financial advisers of the receiving party, and regulatory or judicial bodies)
An NDA is enforceable in court when breached. It is advisable that every business have a template NDA to suit any business situation it may find itself. NDAs could be entered with business partners, colleagues, employees, service providers, consultants, investors etc. Practically, anyone whom you would be sharing confidential and/or proprietary information with.
Sometimes, a non-circumvention clause may be included in an NDA. A non-circumvention clause is a clause which restricts the use of information shared for any other purpose or transaction other than the agreed business use/transaction.
So, take for example, in a business collaboration between a certain Ogbuefi Nnamani, and De SuperStores Ltd., Ogbuefi Nnamani reveals details about his supplier to De SuperStores Ltd so that De SuperStores Ltd, can get certain supplies needed for their collaboration. A non-circumvention clause prevents De SuperStores Ltd. from transacting with the supplier other than for the collaboration without t Ogbuefi Nnamani consent.
In the same vein an employee who signs an NDA which as a non-circumvention clause may be prevented from doing business with an employer’s (or former employer) customers, vendors, employees etc.
One more important thing to note about NDAs is that they are usually time bound and the confidentiality period usually depends on the transaction for which the NDA is being entered. The most common duration is 2 years.
Now you know what an NDA is and why you need one.
