Whether you want to protect confidential information from falling into the wrong hands, control the use of trade secrets and proprietary information, or simply ensure that private information remains private, a non-disclosure agreement (NDA) can be the most effective tool. An NDA is a legally binding agreement between two or more parties that establishes a confidential relationship and creates a duty of confidentiality that prevents the parties from disclosing that information to a third-party.

But what exactly does an NDA mean? Do the laws around NDAs vary from state to state? What should you know about NDAs if you are located in New York?

In this article, UpCounsel will provide answers to frequently asked questions (FAQs) about NDA meaning and New York law. We will look at the elements of an NDA and discuss the use of external advisors and contractors. We will also discuss differences in the NDA between New York and other states, and the importance of upholding the confidentiality of certain types of information.

What is an NDA?

An NDA is a legally binding agreement between two or more parties that establishes a confidential relationship and creates a duty of confidentiality that prevents the parties from disclosing that information to a third-party. An NDA prohibits the release of private information between the parties to the agreement, as well as restricting the use of that information, such as proprietary business information, trade secrets, and other confidential material.

An NDA is an effective way to protect confidential information from unauthorized disclosure and misuse. This agreement may include restrictions on the use of certain information, restricting how recipients can use that information, how recipients must handle the information, and the consequences for violating the agreement.

What Are the Elements of an NDA?

The elements of an NDA are outlined in the agreement itself. These elements may include:

The scope of the agreement, which outlines the information and disclosures that are to remain confidential;

A list of parties who are subject to, and bound by, the agreement;

A set time limit for the agreement, which can be indefinite in some cases;

Any exceptions or restrictions that apply, such as a restriction on the transfer of information to third parties or limits placed upon the use of the confidential information.

Can External Advisors or Contractors Be Included in an NDA?

External advisors and contractors such as vendors and partners may be parties to an NDA. In instances where a third-party advisor or contractor is to be provided access to confidential information, it often makes sense to include them in the NDA as a party to the agreement.

This helps to ensure that all parties who will be handling confidential information will be legally bound to all applicable terms of the NDA, thus protecting the confidential information from unauthorized release or misuse.

Do Laws Regarding NDA Vary by State?

Yes, laws regarding NDAs may vary by state. It is important to be aware of any differences between state laws when considering an NDA agreement.

In New York, for example, NDAs are governed by the rules of contract law, which means that all parties must have a freely entered, consensual agreement; that consideration must be exchanged; and that all parties are legally bound to the agreement. Additionally, New York courts may invalidate an NDA if it contains excessive restrictions that are detrimental to one of the parties’ ability to engage in their business.

What Information Does an NDA Typically Protect?

An NDA typically applies to all forms of confidential information, including trade secrets, financial information, product information, customer data, and other valuable intellectual property. It may also cover confidential discussions held between two or more parties, such as conversations about potential deals, joint ventures, or mergers.

In order for a piece of information to be considered confidential, it should typically meet two criteria: it should have some independent value that is known only to the parties to the NDA, and it should be protectable against misuse.

Why is Upholding the Confidentiality of Certain Types of Information Important?

Upholding the confidentiality of certain types of information is important for those involved in highly competitive industries, in which one party’s competitive edge may be undermined by the disclosure of confidential information.

It is also important for businesses to protect confidential information when sharing customer data, trade secrets, and other sensitive information with third parties. These agreements help to ensure that the value of the confidential information remains intact and that any confidential information released is not misused.

By understanding the NDA meaning and the laws involved, businesses in New York can protect their competitive advantages and confidential information. UpCounsel is a platform that can provide access to experienced legal counsel for advice on these matters. Our network of experienced attorneys can help businesses draw up NDAs that are compliant with New York law and serve to protect confidential information.


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