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The corporate world often requires keeping vital information a secret for a variety of reasons. Whether this means a business’s financial figures, innovative product designs, or even internal communication, there needs to be some form of protection to ensure that the information will not be disclosed to the public or competitors. For this reason, many businesses opt to create a non-disclosure agreement or NDA. Here are some frequently asked questions regarding NDAs and their importance for companies.

What is an NDA?

An NDA is a legally-binding agreement between two parties in which one party agrees to keep certain information or data confidential. The NDA usually documents confidential information, inventions, trade secrets, and processes that must not be disclosed or made available to any third party without written consent. In essence, this agreement is created to ensure that parties involved in a business relationship protect one another’s confidential data.

The primary purpose of the NDA is to protect businesses and help preserve their competitive advantage. This agreement serves as the main line of defense that ensures the safety of confidential information. It also prevents any dissemination of vital information without knowledge or consent.

What are the different types of NDAs?

There are two main types of NDAs: unilateral and mutual. A unilateral NDA or one-way NDA is when one party (disclosing party) is the only one that will be revealing confidential information while the receiving party does not need to disclose any information. This type of NDA is typically used between two individuals or between an individual and a business.

On the other hand, a mutual or two-way NDA is a requirement when both parties are disclosing confidential information to one another. This document is necessary when two parties are embroiled in business negotiations, exchanging trade secrets, or signing a contract.

Are NDAs and NNNs the same?

No, NDAs and Non-Compete Non-Disclosures (NNNs) are not the same. Although both of these documents are used to protect confidential information, only the NNN covers the protection and prevention of competition. This agreement is created to protect both the employer and employees, usually after the latter’s employment ends. This document further ensures that the employee will refrain from disclosing any confidential or proprietary information to any other competitors.

Can an NDA be modified?

Yes, it is possible to modify an NDA under certain circumstances. In order to modify an NDA, only both parties’ written consent is required. If the scope of a contract is changed significantly, then it's best to draft another NDA with the revised changes. Each business will need to understand local regulations that might impact modification or termination of the agreement.


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