Editing Non-disclosure agreement

{{Short description|Contractual agreement not to disclose specified information}}
{{Use dmy dates |date=September 2020}}
[[File:Old Banks, Lower Thames St. Oamaru - panoramio.jpg|thumb|285x285px|Many [[Financial institution|banking institutions]] maintain client privacy through confidentiality agreements. Some, akin to [[attorney–client privilege]], offer [[Bank secrecy|banker–client privilege]].]]
A '''non-disclosure agreement''' ('''NDA'''), also known as a '''confidentiality agreement''' ('''CA'''), '''confidential disclosure agreement''' ('''CDA'''), '''proprietary information agreement''' ('''PIA'''), or '''secrecy agreement''' ('''SA'''), is a [[law|legal]] [[contract]] or part of a contract between at least two [[party (law)|parties]] that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to. [[Physician–patient privilege|Doctor–patient confidentiality]] (physician–patient privilege), [[attorney–client privilege]], [[priest–penitent privilege]] and [[Bank secrecy|bank–client confidentiality]] agreements are examples of NDAs, which are often not enshrined in a written contract between the parties.

It is a contract through which the parties agree not to disclose any information covered by the agreement. An NDA creates a confidential relationship between the parties, typically to protect any type of confidential and proprietary information or [[trade secret]]s. As such, an NDA protects non-public business information. Like all contracts, they cannot be enforced if the [[Illegal agreement|contracted activities are illegal]]. NDAs are commonly signed when two companies, individuals, or other entities (such as partnerships, societies, etc.) are considering doing business and need to understand the processes used in each other's business for the purpose of evaluating the potential business relationship. NDAs can be "mutual", meaning both parties are restricted in their use of the materials provided, or they can restrict the use of materials by a single party. An employee can be required to sign an NDA or NDA-like agreement with an employer, protecting trade secrets. In fact, some employment agreements include a clause restricting employees' use and dissemination of company-owned confidential information. In legal disputes resolved by [[Settlement (litigation)|settlement]], the parties often sign a confidentiality agreement relating to the terms of the settlement.<ref>{{cite web |title=Confidentiality and Non-Disclosure Clauses in Commercial Contracts – Is it worth the Effort? |date=17 March 2016 |author=Henry Pharr III |publisher=Real Estate Drill Down |url=https://realestatedrilldown.com/2016/03/17/confidentiality-and-non-disclosure-clauses-in-commercial-contracts-is-it-worth-the-effort/ |quote=[M]ost landlords and tenants are united in interest in not wanting the terms of their settlement publicized in a public forum where they may be misunderstood or misinterpreted as being weak, scared or simply not feeling strongly about their business and their actions. |access-date=8 February 2018 |archive-url=https://web.archive.org/web/20180826122959/https://realestatedrilldown.com/2016/03/17/confidentiality-and-non-disclosure-clauses-in-commercial-contracts-is-it-worth-the-effort/ |archive-date=26 August 2018 |url-status=dead }}</ref><ref>{{cite web|author=Joe Davies |year=2014 |title=Confidentiality Provisions in Settlement Agreements |publisher=Vann Attorneys |url=https://vannattorneys.com/confidentiality-provisions-settlement-agreements/ |quote=If you've ever signed a settlement agreement resolving some dispute, chances are pretty good it contained a confidentiality provision. In many cases, one side or both wish to keep the terms of a settlement to themselves – whether to avoid disclosure of amounts paid to settle or for some other reason.}}</ref> Examples of such agreements are The Dolby Trademark Agreement with [[Dolby Laboratories]], the Windows Insider Agreement, and the [[Halo (franchise)|Halo]] CFP (Community Feedback Program) with [[Microsoft]].

In some cases, employees who are dismissed following their complaints about unacceptable practices ([[whistleblower]]s), or discrimination against and harassment of themselves, may be paid compensation subject to an NDA forbidding them from disclosing the events complained about. Such conditions in an NDA may not be enforceable by law, although they may intimidate the former employee into silence.<ref name=consult>{{Cite web|url=https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/783011/confidentiality-clauses-consultation.pdf|title=Consultation on Confidentiality Clauses|website=UK [[Department for Business, Energy & Industrial Strategy]]|date=March 2019|quote=A confidentiality clause might suggest to the worker that they do not have rights, such as whistleblowing or taking a matter to a tribunal, that in fact cannot be abrogated. Or they could be unreasonably expansive and insist that a worker not discuss the issue under consideration with people such as the police, a doctor, or a therapist.}}</ref>

A similar concept is expressed in the term "non-disparagement agreement", which prevents one party from stating anything '[[derogatory]]' about the other party.<ref>Kilday, G., [https://www.hollywoodreporter.com/movies/movie-news/director-paul-schrader-says-his-741590/ Director Paul Schrader Says His New Nicolas Cage Movie "Was Taken Away From Me"], The Hollywood Reporter'', published 16 October 2014, accessed 6 July 2023</ref>

== General types ==
A non-disclosure agreement (NDA) may be classified as unilateral, bilateral, or multilateral:

=== Unilateral ===
A unilateral NDA (sometimes referred to as a one-way NDA) involves two parties where only one party (i.e., the disclosing party) anticipates disclosing certain information to the other party (i.e., the receiving party) and requires that the information be protected from further disclosure for some reason (e.g., maintaining the secrecy necessary to satisfy patent laws<ref>{{cite web 
 |url=http://www.tms.org/pubs/journals/JOM/matters/matters-9405.html
 | title=Understanding Confidentiality Agreements
 | first=David V.
 | last=Radack
 | year=1994
 | work=JOM
 | publisher=[[The Minerals, Metals & Materials Society]]
 | quote=Second, the use of confidentiality agreements can prevent the forfeiture of valuable patent rights
}}</ref> or legal protection for trade secrets, limiting disclosure of information prior to issuing a press release for a major announcement, or simply ensuring that a receiving party does not use or disclose information without compensating the disclosing party).

=== Bilateral===
A bilateral NDA (sometimes referred to as a mutual NDA, MNDA, or a two-way NDA) involves two parties where both parties anticipate disclosing information to one another that each intends to protect from further disclosure. This type of NDA is common for businesses considering some kind of joint venture or merger.

When presented with a unilateral NDA, some parties may insist upon a bilateral NDA, even though they anticipate that only one of the parties will disclose information under the NDA. This approach is intended to incentivize the drafter to make the provisions in the NDA more "fair and balanced" by introducing the possibility that a receiving party could later become a disclosing party or vice versa, which is not an entirely uncommon occurrence.

=== Multilateral ===
A multilateral NDA involves three or more parties where at least one of the parties anticipates disclosing information to the other parties and requires that the information be protected from further disclosure. This type of NDA eliminates the need for separate unilateral or bilateral NDAs between only two parties. E.g., a single multiparty NDA entered into by three parties who each intend to disclose information to the other two parties could be used in place of three separate bilateral NDAs between the first and second parties, second and third parties, and third and first parties.

A multilateral NDA can be advantageous because the parties involved review, execute, and implement just one agreement. This advantage can be offset by more complex negotiations that may be required for the parties involved to reach a unanimous consensus on a multilateral agreement.

== Content ==
A NDA can protect any type of information that is not generally known. They may also contain clauses that will protect the person receiving the information so that if they lawfully obtained the information through other sources they would not be obligated to keep the information secret.<ref>{{cite web |url=http://smallbusiness.yahoo.com/r-article-a-57763-m-4-sc-25-intellectual_property_using_confidentiality_agreements-i |title=Intellectual Property: Using Confidentiality Agreements |publisher=Yahoo! Small Business |url-status=dead |archive-url=https://web.archive.org/web/20090323220129/http://smallbusiness.yahoo.com/r-article-a-57763-m-4-sc-25-intellectual_property_using_confidentiality_agreements-i |archive-date=23 March 2009}}</ref> In other words, the NDA typically only requires the receiving party to maintain information in confidence when that information has been directly supplied by the disclosing party

Some common issues addressed in an NDA include:<ref>{{cite web
 | url=https://www.extension.iastate.edu/agdm/wholefarm/html/c5-80.html
 | title=Overview of Confidentiality Agreements
 | first1=by Mark J.
 | last1=Hanson
 | first2=Joe R.
 | last2=Thompson
 | first3=Joel J.
 | last3=Dahlgren
 | publisher=Iowa State University Extension and Outreach
}}</ref>

* outlining the parties to the agreement;
* whether confidential information must be labeled as confidential
* the definition of what is confidential, i.e. the information to be held confidential. Modern NDAs will typically include a [[wikt:laundry list|laundry list]] of types of items that are covered, including unpublished [[patent application]]s, know-how, schema, [[finance|financial]] information, verbal representations, customer lists, vendor lists, business practices/strategies, etc.;
* the disclosure period – information not disclosed during the disclosure period (e.g., one year after the date of the NDA) is not deemed confidential;
* the exclusions from what must be kept confidential. Typically, the restrictions on the disclosure or use of confidential data will be invalid if
** the recipient had prior knowledge of the materials;
** the recipient gained subsequent knowledge of the materials from another source;
** the materials are generally available to the public; or
** the materials are subject to a [[subpoena]]
* provisions restricting the transfer of data in violation of laws governing export control and [[national security]];
* the term and conditions (in years) of the confidentiality, i.e. the time period of confidentiality;
* the term (in years) the agreement is binding;
* permission to obtain [[injunction|ex-parte injunctive relief]];
* description of the actions that need to be done with the confidential materials upon the agreement ending;
* what/when it can be modified by a court
* the obligations of the recipient regarding the confidential information, typically including some version of obligations:
** to use the information only for enumerated purposes;
** to disclose it only to persons with a need to know the information for those purposes;
** to use appropriate efforts (not less than reasonable efforts) to keep the information secure. Reasonable efforts is often defined as a standard of care relating to confidential information that is no less rigorous than that which the recipient uses to keep its own similar information secure; and
** to ensure that anyone to whom the information is disclosed further abides by obligations restricting use, restricting disclosure, and ensuring security at least as protective as the agreement; and
** destruction or return upon request
* types of permissible disclosure – such as those required by [[law]] or [[court order]] (many NDAs require the receiving party to give the disclosing party prompt notice of any efforts to obtain such disclosure, and possibly to cooperate with any attempt by the disclosing party to seek judicial protection for the relevant confidential information).
* the law and [[jurisdiction]] governing the parties. The parties may choose the exclusive jurisdiction of a court of a [[country]].
* whether or not juries, arbitration allowed
* who owns or has rights over the information

==Law and practice by jurisdiction==
===Australia===
[[Deed]]s of confidentiality and fidelity (also referred to as deeds of confidentiality or confidentiality deeds) are commonly used in [[Australia]]. These documents generally serve the same purpose as and contain provisions similar to NDAs used elsewhere.

===India===
NDAs are used in [[India]].<ref name="Basu 2007 p. 327">{{cite book | last=Basu | first=K. | title=The Oxford Companion to Economics in India | publisher=Oxford University Press | year=2007 | isbn=978-0-19-566984-8 | url=https://books.google.com/books?id=FSy0AAAAIAAJ | access-date=2 Jul 2023 | page=327}}</ref> They have been described as "an increasingly popular way of restricting the loss of [[Research and development|R&D]] knowledge through employee turnover in Indian IT firms".<ref name="Basu 2007 p. 327"/> They are often used by companies from other countries who are [[outsourcing]] or [[offshoring]] work to companies in India.<ref name="Swaminathan 2009 p. 46">{{cite book | last=Swaminathan | first=J.M. | title=Indian Economic Superpower: Fiction Or Future? | publisher=World Scientific Pub. | series=World Scientific series on 21st century business | year=2009 | isbn=978-981-281-465-4 | url=https://books.google.com/books?id=w39pDQAAQBAJ&pg=PA46 | access-date=2 Jul 2023 | page=46}}</ref><ref name="Vagadia 2007 p. 120">{{cite book | last=Vagadia | first=B. | title=Outsourcing to India - A Legal Handbook | publisher=Springer Berlin Heidelberg | year=2007 | isbn=978-3-540-72220-5 | url=https://books.google.com/books?id=YvZOD39BVHwC&pg=PA161 | access-date=2 Jul 2023 | page=120}}</ref> Companies outsourcing research and development of [[Biopharmaceutical|biopharma]] to India use them, and Indian companies in pharmaceuticals are "competent" in their use.<ref name="Chowdhury 2011 p. 13">{{cite book | last=Chowdhury | first=P.R. | title=Outsourcing Biopharma R&D to India | publisher=Elsevier Science | series=Woodhead Publishing Series in Biomedicine | year=2011 | isbn=978-1-908818-01-0 | url=https://books.google.com/books?id=IhhtAgAAQBAJ&pg=PA13 | access-date=2 Jul 2023 | page=13}}</ref><ref name="Commission p. 8-PA14">{{cite book | last=Commission | first=U.S.I.T. | title=Competitive Conditions for Foreign Direct Investment in India, Staff Research Study #30 | publisher=DIANE Publishing | isbn=978-1-4578-1829-5 | url=https://books.google.com/books?id=hMIo-FZXCYEC&pg=SA8-PA14 | access-date=2 Jul 2023 | page=8-PA14}}</ref> In the [[space industry]], NDAs "are crucial".<ref name="Agarwal 2022 p. 107">{{cite book | last=Agarwal | first=A.K. | title=Doing Business in India: The PESTEL Framework | publisher=Springer Nature Singapore | series=Management for Professionals | year=2022 | isbn=978-981-16-9045-7 | url=https://books.google.com/books?id=PYxaEAAAQBAJ&pg=PA107 | access-date=2 Jul 2023 | page=107}}</ref> "Non-disclosure and confidentiality agreements ... are ... generally enforceable as long as they are reasonable."<ref name="Rowe Sandeen 2015 p. 198">{{cite book | last1=Rowe | first1=E.A. | last2=Sandeen | first2=S.K. | title=Trade Secrecy and International Transactions: Law and Practice | publisher=Edward Elgar Publishing, Incorporated | series=Elgar Intellectual Property Law and Practice series | year=2015 | isbn=978-1-78254-078-6 | url=https://books.google.com/books?id=qY5HCgAAQBAJ&pg=PA198 | access-date=2 Jul 2023 | page=198}}</ref> Sometimes NDAs have been [[Anti-competitive practices|anti-competitive]] and this has led to legal challenges.<ref name="Bharadwaj Devaiah Gupta 2022 p. 91">{{cite book | last1=Bharadwaj | first1=A. | last2=Devaiah | first2=V.H. | last3=Gupta | first3=I. | title=Locating Legal Certainty in Patent Licensing | publisher=Springer Nature Singapore | year=2022 | isbn=978-981-15-0181-4 | url=https://books.google.com/books?id=n6ueEAAAQBAJ&pg=PA91 | access-date=2 Jul 2023 | page=91}}</ref>

===United Kingdom===
In the [[United Kingdom]], the term "back-to-back agreement" refers to an NDA entered into with a third party who legitimately receives confidential information, putting them under similar non-disclosure obligations as the initial party granted the information. [[Case law]] in a 2013 [[Court of Appeal (England and Wales)|Court of Appeal]] decision (''Dorchester Project Management v [[BNP Paribas]]'') confirmed that a confidentiality agreement will be interpreted as a contract subject to the [[Interpreting contracts in English law|rules of contractual interpretation]] which generally apply in English courts.<ref>Howell, A., [https://www.taylorwessing.com/en/insights-and-events/insights/pre-2016/back-to-back-confidentiality-agreements Back-to-back confidentiality agreements], ''[[Taylor Wessing]]'', published 19 April 2013, accessed 27 July 2023</ref>

NDAs are often used as a condition of a financial settlement in an attempt to silence whistleblowing employees from making public the misdeeds of their former employers. There is a law, the [[Public Interest Disclosure Act 1998]], which allows "protected disclosure" despite the existence of an NDA, although employers sometimes intimidate the former employee into silence despite this.<ref name=consult/><ref>{{cite news|url=https://www.bbc.co.uk/news/education-47936662 |title=UK universities face 'gagging order' criticism|website=BBC News|author=Rianna Croxford |date= 17 April 2019}}</ref>

In some legal cases where the conditions of a confidentiality agreement have been breached, the successful party may choose between [[damages]] based on an account of the commercial profits which might have been earned if the agreement had been honoured, or damages based on the price of releasing the other party from its obligations under the agreement.<ref>{{cite web | title=VC firm accused of stealing business plan must pay damages, not profits |publisher=Pinsent Masons | date=29 March 2010 | url=https://www.pinsentmasons.com/out-law/news/vc-firm-accused-of-stealing-business-plan-must-pay-damages-not-profits}}</ref>

Commercial entities entering into confidentiality agreements need to ensure that the scope of their agreement does not go beyond what is necessary to protect commercial information. In the case of ''Jones v Ricoh'', heard by the [[High Court of Justice|High Court]] in 2010, Jones brought an action against the photocopier manufacturer [[Ricoh]] for breach of their confidentiality agreement when Ricoh submitted a [[invitation to tender|tender]] for a contract with a third party. Ricoh sought release from its obligations under the agreement via an application for [[summary judgment]], and the court agreed that the relevant wording "went further than could reasonably be required" to protect commercial information. The agreement was held to be in breach of [[Article 101 of the Treaty on the Functioning of the European Union]], which prohibits agreements which had the object or effect of distorting competition, and was therefore unenforceable.<ref>Gerschlick, P., [https://www.mondaq.com/uk/eu-law-regulatory/106334/too-wide-a-restriction-on-contractual-non-compete-clause-between-non-competitors-breached-eu-competition-law--jones-v-ricoh-high-court UK: Too Wide a Restriction on Contractual Non-Compete Clause Between Non-Competitors Breached EU Competition Law – Jones v Ricoh, High Court], ''Mondaq'', published 27 July 2010, accessed 5 October 2023</ref>

{{As of|2025}} NDAs have long been misused in the UK to prevent people, usually employees, from reporting sexual and other abuse they have suffered. Parliament has consulted regarding proposed legislation to curb such use, with a debate on the use of NDAs by employers to cover up workplace abuse and discrimination.<ref>{{cite news| last=Sodha | first=Sonia | title=Charities and even unions have begun wielding NDAs to cow and silence|newspaper=The Guardian | date=6 April 2025 | url=https://www.theguardian.com/commentisfree/2025/apr/06/charities-and-even-unions-have-begun-wielding-ndas-to-cow-and-silence}}</ref><ref name=consult/>

===Ireland===
In Ireland, confidentiality agreements or non-disclsure agreements are affected by the Maternity Protection, Employment Equality and Preservation of Certain Records Act 2024. <ref>{{cite web |title=Employment A-Z Glossary |url=https://www.mhc.ie/latest/insights/employment-a-z-glossary |website=Mason Hayes Curran |access-date=28 January 2025 |language=en}}</ref>
The Act amends the Employment Equality Act 1998 by restricting the use of non-disclosure agreements (NDA).<ref>{{cite web |title=New Restrictions on Non-Disclosure Agreements|first1=Melanie|last1=Crowley|first2=Elizabeth|last2=Ryan|url=https://www.mhc.ie/latest/insights/new-restrictions-on-non-disclosure-agreements |publisher=Mason Hayes Curran |date=5 December 2024|language=en}}</ref>

The 2024 Act renders void any NDA that prohibits an employee from disclosing:

* An allegation that s/he has experienced discrimination, harassment, sexual harassment or victimisation regarding his/her employment or potential employment, or
*Any action taken by an employer or employee in response to the making of such an allegation, including any proceedings taken by the employee.

===United States===
NDAs are very common in the United States, with more than one-third of jobs in America containing an NDA. The [[United States Congress]] passed the [[Speak Out Act]] in 2022, which prohibits them in regard to [[sexual harassment]] and [[sexual assault]], and the bill was signed into law by President [[Joe Biden]] on December 7, 2022.<ref>{{Cite web |last=Price |first=Michelle L. |date=December 7, 2022 |title=Biden signs law curbing nondisclosure agreements that block victims of sexual harassment from speaking out|url=https://www.pbs.org/newshour/politics/biden-signs-law-curbing-nondisclosure-agreements-that-block-victims-of-sexual-harassment-from-speaking-out |access-date=December 7, 2022 |website=PBS |language=en}}</ref>

Some states, including [[California]], recognise special circumstances relating to NDAs and [[non-compete clause]]s. [[California courts|California's courts]] [[California State Legislature|and legislature]] have signalled that they generally value an employee's mobility and entrepreneurship more highly than they do protectionist doctrine.<ref name="Hurd1">{{cite web |last=Chapman |first=Lisa |date=September 2010 |title=The Impact of the Mark Hurd Saga on California's Ban on Covenants Not to Compete |url=http://www.rroyselaw.com/newsletter_mark_hurd_saga.html |url-status=dead |archive-url=https://web.archive.org/web/20170214222522/http://www.rroyselaw.com/newsletter_mark_hurd_saga.html |archive-date=14 February 2017}}</ref><ref name="Hurd2">{{cite web |last=Gromov |first=Gregory |date=October 2010 |title=NDA Experiment Set up by Mark Hurd |url=http://www.netvalley.com/silicon_valley/Hurd_NDA_HP.htm |publisher=NetValley}}</ref>

== See also ==
* [[Arrow information paradox]]
* [[Attorney–client privilege]]
* [[Bank secrecy|Bank–client confidentiality]]
* [[Due diligence]]
* [[Gag order]]
* [[Non-compete clause]]
* [[Physician–patient privilege]]
* [[Severance package]]

==References==
{{Reflist}}

== Further reading ==
{{refbegin}}
* {{cite magazine | last=Wiedeman | first=Reeves | date=1 July 2024 | title=How the NDA became the defining legal document of our time | magazine=[[The Cut (New York)|The Cut]] | publication-place=New York City | publisher=[[Vox Media]] | url=https://www.thecut.com/article/nda-non-disclosure-agreement-popularity.html | access-date=2 July 2024}}
{{refend}}

== External links ==
* [https://web.archive.org/web/20051025082007/http://www.patent.gov.uk/patent/info/cda.pdf Confidentiality and Confidential Disclosure Agreements (CDA)] booklet edited by the [[UK Intellectual Property Office]] - (''2005-01'')
* [https://www.gov.uk/government/publications/non-disclosure-agreements/non-disclosure-agreements Information about non-disclosure-agreements (NDAs)] published by the [[UK Intellectual Property Office]] - (''2018-01-15'')

{{Authority control}}

[[Category:Information sensitivity]]
[[Category:Intellectual property law]]
[[Category:Legal documents]]
[[Category:Labour law]]
[[Category:Secrecy]]
[[Category:Trade secrets]]