NON-DISCLOSURE AGREEMENT

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A non-disclosure agreement (NDA) is a legal contract between at least two parties who want to keep confidential information that they share with one another and want to restrict access of the same by third parties. It is also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement (SA). An NDA creates a confidential relation between the parties to protect any type of confidential and proprietary information or trade secrets.

TYPES OF NDA

A non-disclosure agreement (NDA) may be classified as unilateral, bilateral, or multilateral.

Unilateral NDA

A unilateral NDA is also known as a one-way NDA. It involves two parties where one party i.e. the disclosing party anticipates disclosing certain information to the other party i.e. the receiving party and requires that information to be kept protected from further disclosure.

Bilateral NDA

A bilateral NDA is also known as mutual NDA or a two-way NDA.  It involves two parties where both parties anticipate disclosing information to one another that each intends to protect from disclosure to third parties. This type of NDA is necessary in case of businesses which are considering some kind of joint venture or merger.

Multilateral NDA

A multilateral NDA involves three or more parties where at least one of the parties anticipates disclosing information to the other parties and requires that information to be protected from further disclosure. This type of NDA eliminates the need for separate unilateral or bilateral NDAs between two parties. For example- a single multiparty NDA entered into by three parties who each intended to disclose information to the other parties could be used in place of three separate bilateral NDAs between the first and second parties, second and third parties, and third and first parties.

A multilateral NDA can be advantageous but due to the complexities involved in negotiations parties may find it difficult to enter into such an NDA.

CONTENT

The non-disclosure agreement requires a party to maintain information in confidence when that information has been directly supplied by the disclosing party. However, it is sometimes easier to get a simple agreement signed by the receiving party which requires them to keep the information safe and secure. Some common issues addressed in an NDA include:

  • Outlining the parties to the agreement.
  • The definition of what is confidential, i.e. the information to be held confidential.
  • The disclosure period.
  • The law and jurisdiction governing the parties.
  • Types of permissible disclosure.

 

USE OF NDA IN INDIA

The use of non-disclosure an agreement is on the rise in India and is governed by the Indian Contract Act, 1872. Use of an NDA is crucial in many circumstances, such as to bind employees who are developing patentable technology if the employer intends to apply for a patent. Non-disclosure agreements have become very important in the light of India’s growing outsourcing industry.  In India, an NDA must be stamped to be a valid enforceable document.

Sanchayeeta Das

Associate

The Indian Lawyer & Allied Services

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