What is the purpose of a non-disclosure agreement (NDA)?

A non-disclosure agreement (NDA) primarily serves to ensure the confidentiality of sensitive information shared between parties. This legal contract establishes the obligation for one or more parties to keep certain information secret and not disclose it to unauthorized third parties. NDAs are commonly used in scenarios where businesses need to share proprietary information, trade secrets, or other confidential data with potential partners, employees, or vendors while protecting their competitive interests.

The focus of an NDA is on safeguarding information rather than outlining employee responsibilities, defining employment terms, or addressing trademark issues. While these areas are also important in business, they fall under different legal instruments or agreements. For instance, employment contracts would cover employee responsibilities and employment terms, while intellectual property laws would address trademark infringement. Thus, the essential purpose of an NDA is centered on the confidentiality aspect.