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What is a non-disclosure agreement?

A non-disclosure agreement is also called a confidentiality agreement. The agreement is entered into because two or more people or business entities are engaging in or planning to engage in a relationship that will involve the sharing of confidential information. In it's most basic form, the non-disclosure agreement usually requires one person or party to agree not to disclose information it might learn about the other person or party or associated business practices.

For example, a business or professional who provides consultant services will regularly work with other businesses on sensitive projects. That consultant obviously shouldn't share any of his or her client's proprietary or confidential information with others -- that's just bad business. However, most companies protect themselves beyond the bonds of common sense and ethics by requiring contracted professionals to sign a non-disclosure agreement.

You might also sign a confidentiality agreement as an employee. Signing such an agreement means that you won't talk about certain aspects of your work outside of the workplace or share information about your work with anyone who is not authorized to receive that information.

Non-disclosure agreements range from simple contracts protecting what is obviously sensitive or private information to more complex documents that get detailed about what can and can't be shared and with who. Because these agreements can be complex -- and many people sign multiple versions throughout their career -- it is possible to disclose information protected by such a contract without realizing it.

If you are facing a dispute regarding a confidentiality agreement, then you might need legal help to protect yourself or your interests. This is true no matter which side of the issue you are on.

Source: Investopedia, "Confidentiality Agreement," accessed May 25, 2016

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