Known by various names such as confidentiality agreement (CA), confidentiality disclosure agreement (CDA), proprietary information agreement (PIA) and secrecy agreement (SA), a non-disclosure agreement meaning is a legally binding contractual obligation between two or more parties containing information that the parties keep it confidential. A third party is not given access to the information present in a non-disclosure agreement. An NDA aims to create a confidential agreement whereby, both the parties mutually agree not to disclose information to a third party, which could also be a trade secret. NDAs play a major role in protecting private sensitive information as well as Intellectual Property rights by clearly outlining as to what information must be kept confidential and what must be made available to the world. An NDA is usually contracted between two entities, companies or individuals who consider doing business with each other and to understand the nature of the business carried out by each other. NDAs cannot be enforced if the contracted activities are felonies, just like all other contracts.
A few examples of a Non-disclosure agreement are:-
- Attorney-client privilege
- Doctor-patient confidentiality
- Priest-penitent privilege
- Bank-client confidentiality
Types of Non Disclosure agreement
There are three kinds of non-disclosure agreements, namely unilateral, bilateral and multilateral.
- Unilateral: In a unilateral non-disclosure agreement, there are two parties and one party anticipates the disclosure of certain information to the other party and protects that information from getting further disclosed. Example – Protection of a trade secret.
- Bilateral: Unlike a unilateral non-disclosure agreement, bilateral non-disclosure agreement requires two parties to anticipate in disclosing information to each other that intends each to protect them from further disclosure. A bilateral NDA is also called mutual or two-way NDA.
- Multilateral: As the name suggests, such an NDA requires three or more parties where at least one party anticipates disclosing some information to the other parties from further disclosure of the same. Hence, in such a kind of NDA, the parties usually have the scope of reviewing, deliberating and finally reaching a unanimous judgement.
The content of a Non-Disclosure Agreement
An NDA clearly defines who are the parties to the contract are. It is for the parties, (whether two, three or more) to decide what information must be kept confidential. In other words, the parties define the word ‘confidential.’ The way in which the recipient is ought to handle the confidential information, failing which will result in the breach of contract is also prescribed in an NDA. An NDA also mentions the disclosure period and the information not disclosed during the said period will not be deemed as confidential. Apart from these an NDA also defines the terms and conditions of the parties, the law and jurisdiction under which they are governed, no.of years the agreement is binding on them, if or not certain information can be disclosed to a third person with permission, etc.
Non Disclosure Agreement in India
In India, a non-disclosure agreement is governed and protected by the legislation known as the Indian Contract Act,1872. It is mandatory for an NDA to be stamped to be legally enforceable in India. A penal action can also be initiated against an employee under Section 406 of the Indian Penal Code, 1860 for Criminal breach of trust if he/she engages in misusing and disclosing a piece of secret information which was protected under an NDA. Further, civil proceedings are also maintainable under Section 63 of the copyright act, if the information protected under the copyright act is stolen.
A Non Disclosure Agreement sample used in India
THIS NON-DISCLOSURE AGREEMENT (the “Agreement”) is entered into on this 29th day of June 2016 by and between XYZ, having its registered office at A-7 Second floor, Connaught Place, New Delhi-110028 ( the “Receiving Party”), and …………………………………………………………….(operating under the trade name “A B C”), having its office at …………………………………………………………………………, (the “Disclosing Party”).
The Receiving Party hereto desires to participate in discussions regarding providing financial assistance in the form of various products from time to time to small and medium enterprises introduced to it by the Disclosing Party (the “Transaction”). During these discussions, the Disclosing Party may share certain confidential and proprietary information with the Receiving Party. Therefore, in consideration of the mutual promises and covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
This includes —-
- Definition of Confidential Information.
- Disclosure of Confidential Information
- Use of Confidential Information
- Compelled Disclosure of Confidential Information.
- Return of Confidential Information.
- Notice of Breach.
- No Binding Agreement for Transaction
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
DEF Ltd., ABC.. Pvt. Ltd.
XYZ By _____
Vice President Name: