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What is a Non-Disclosure Agreement
A non-disclosure agreement (NDA) is a legally binding contract that prevents parties from sharing confidential information with unauthorized individuals or organizations. NDAs protect sensitive data such as trade secrets, customer lists, product designs, or financial information.
They can be unilateral (one party discloses) or mutual (both parties share information).
Why NDAs Matter
NDAs are foundational to trust and confidentiality in business relationships. They enable companies to collaborate, negotiate, or share intellectual property safely.
Strong NDAs:
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Define what qualifies as “confidential information.”
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Set time limits for confidentiality obligations.
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Specify permitted uses of disclosed information.
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Protect trade secrets under applicable laws.
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Outline remedies in case of breach.
Best Practices for NDAs
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Tailor terms to the type of relationship (vendor, employee, investor).
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Exclude information already public or independently developed.
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Clearly define duration of obligations (often 2–5 years).
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Include return or destruction requirements after use.
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Use mutual NDAs when both parties share proprietary data.
Example of NDA in Practice
Two companies exploring a partnership sign a mutual NDA before sharing product roadmaps and financial projections. Both agree not to disclose or use the information for any purpose other than evaluation.
