Nondisclosure Agreement

Posted in Human Resources Terms, Total Reads: 1592

Definition: Nondisclosure Agreement

It is also known as confidentiality agreement (CA). Basically it is a legal contract between at least two parties.

A NDA outlines confidential information that both the parties are willing to share with one another for some specific purposes or joint goal, but do not wish it to be accessible by any third party.

NDAs are commonplace in the world of business. NDA is a form of legal contract that is signed by parties that are about to indulge in any form of business or transaction. The contract outlines the confidentiality level of the business and gives guidelines on what can and cannot be shared during the course of the engagement. For the same reason, NDAs are sometimes also referred to as “Confidentiality Agreements”.


The Contract:

NDA contract typically has details about the parties involved in the engagement, kind of systems and knowledge that will be shared between them, what cannot be shared by them in public platforms, what can possibly be shared on the public domain, and other legal aspects.



NDAs are a crucial part of any business engagement and violation of the NDA guidelines can lead to serious legal hassles. The contract has clear rules on what is permissible as against what is not, and any tampering of those guidelines will be dealt with seriously. The contract elucidates possible implications and penalties in case of such violations.



When two companies decide to do business with each other for a period of time, they will first enter into a NDA. This is done so as they will be exposed to each other’s business systems and other critical data/information during the course of the engagement. Hence the parties sign a contract to indicate that they will not leak out any form of crucial information that they learn about each other during the period of the contract.


In a lot of companies, employees are asked to sign NDAs with their employers or clients. This is more applicable when employees are working with clients of high-security standards like banks and insurance companies. Such a contract will mandate the employee not to share any sort of information with the outside world about the kind of work that he/she does for the client.


Hence, this concludes the definition of Nondisclosure Agreement along with its overview.

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