Non-Disclosure Agreement - NDA

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DEFINITION of 'Non-Disclosure Agreement - NDA'

A legal contract between two or more parties that signifies a confidential relationship exists between the parties involved. The confidential relationship often will refer to information that is to be shared between the parties but should not be made available to the general public.

Also referred to as a 'confidentiality agreement'.

BREAKING DOWN 'Non-Disclosure Agreement - NDA'

NDAs arise when two companies are about to do business together. The parties are often restricted from releasing information regarding any business processes of the counter-party that are integral to the company's operations. NDAs also may arise between an employer and employee. If the employee will have access to sensitive information about the company they may be asked to sign a NDA when they are hired. This will provide an incentive to the employee not to release this sensitive information and avoid a costly legal headache.

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