LawyerLandLegal Glossary

Non-Disclosure Agreement (NDA)

A contract restricting what one or both sides may do with information the other shares - and, unlike trade secret law, it binds only the person who signed it.

Informational only - this is not legal advice. These definitions explain general legal vocabulary in plain English. They are not advice about your situation, reading them creates no attorney-client relationship, and the law differs from state to state and changes over time. For advice you can rely on, speak to a lawyer licensed in your state.

What it means

An NDA is a promise about information. It identifies what is confidential, states what the receiving side may and may not do with it, and sets how long the restriction lasts. It can be one-way, where only one side is disclosing, or mutual, which is usual when two businesses are exploring working together.

The clauses that decide disputes are rarely the ones people read first. The definition of confidential information sets the whole scope. The standard exclusions - information already public, already known, independently developed, or received legitimately from someone else - are what keep the agreement from covering the receiving party's ordinary knowledge. And the carve-out for disclosure required by law or court order matters, because an NDA cannot lawfully be used to stop someone reporting a crime or responding to a subpoena.

An NDA is a supplement to trade secret protection, not a substitute for it. Trade secret law protects information from anyone who acquires it improperly; an NDA binds the specific person who signed it, and only to the extent it is enforceable in that jurisdiction.

Where this comes from

NDAs are contracts, so their formation and interpretation are state law. The related trade secret regime is both federal and state: the Defend Trade Secrets Act, 18 U.S.C. § 1836, provides a federal civil claim, and § 1833(b) of the same title requires that immunity for confidential disclosures to a government official or in a court filing be notified in agreements governing trade secrets. Restrictions extending into what someone may do next, rather than what they may say, are governed by state law on restraints of trade and some states limit them sharply.

When people hire a lawyer for this

Worth a look before signing when the definition of confidential information is open-ended, when the term is indefinite, or when the agreement reaches beyond confidentiality into non-competition or ownership of what the signer creates. On the disclosing side, the question worth asking is whether an NDA alone is doing work that ought to be done by controlling who receives the information at all - an agreement is a remedy after a breach, and the remedy is usually worth less than the secret.

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Part of the LawyerLand plain-English legal glossary. Definitions are written from primary sources - statutes and court rules - and each entry states the authority it rests on, or says plainly when the doctrine is state law with no national rule.