A standard non-disclosure agreement, also called a confidentiality agreement, is a contract between at least two parties agreeing not to disclose certain information deemed to be confidential. Non-disclosure agreements are often used when a company has a new product it wants to evaluate before releasing it to the public. They are also used to "protect sensitive technical or commercial information from disclosure to others," according to TMS.org.
In a standard non-disclosure agreement, the information that has been deemed confidential must be clearly identified. The agreement should state "as specifically as possible the scope of information covered by the agreement," according to BitLaw.com. A standard non-disclosure agreement will also clearly define the period of time that information is to be kept secret, according to MedLawPlus.com.
When you sign a non-disclosure agreement, you're agreeing to keep certain information secret in return for the right to receive that information. Sometimes, a non-disclosure agreement will clearly list specific instances in which classified information could be revealed to a third party. When you receive information covered by a non-disclosure agreement, you're generally allowed to use it only for specific purposes outlined in the contract, according to BitLaw.com.
Many types of information can be included in a non-disclosure agreement. This includes information such as prototypes, software, tools, systems, engineering drawings, test results and other data, according to TMS.org.
Information can not be defined as confidential if it has been published, is readily available to the public through some other means, or has been developed by a third party, according to MedLawPlus.com.
If one of the parties is found to be in breach of the non-disclosure agreement, you might have to get a court order to stop the "party from continuing to break a confidentiality promise," according to MedLawPlus.com. To do this, you might have to prove that the breach of the non-disclosure agreement has caused you irreparable harm. For this reason, most non-disclosure agreements contain a provision stating that a breach of the contract will cause irreparable harm to the remaining parties.
Non-disclosure agreements are often included in employment agreements. They are used as a first step between two or more companies who are considering doing business together.
They're also used in the contracts between independent contractors and the employers who hire them, and as part of the termination contract for "a business executive most typically upon the change of ownership," according to MedLawPlus.com.