What is an NDA?

What is an NDA?

An NDA is a binding agreement between two (or more) parties that obligates a party or parties to maintain confidentiality. The confidentiality obligations can be mutual or uni-directional (one-way). Other provisions include exceptions to confidentiality, how long the obligations last, and what happens if someone breaches their obligations. It is a widely used document and something many startups and small businesses will come across at least once. This document should be in your files and ready to use with prospective business partners, vendors, contractors, employees, and others if necessary.  

An NDA is a great way to keep proprietary information and trade secrets protected from a business’s partners/vendors/suppliers, competitors, and even employees. However, one must be careful when drafting an NDA to make sure this proprietary information is truly protected. Most NDAs are set to expire after a certain period of time, thus throwing the trade secret protection into jeopardy. An expiration of confidentiality obligations could allow the receiving party to use the information or disclose it. A properly drafted NDA will have a carve-out to protect the confidentiality of trade secrets for as long as they remain trade secrets under applicable law.

Adam Blaier, Esq.


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