NDA, abbreviation for Non-Disclosure Agreement, is a legal and binding document that aims to protect the confidentiality of information involving any type of transaction, negotiation, project, or patented process in any company, between the signatory parties.
The purpose of the NDA is to preserve sensitive information that, if disclosed or known by third parties, would cause damage or disadvantage to the parties. It also serves to protect, for example, trade secret, recipes, formulas and strategies involved in the business against competitors in the field.
In this sense, the NDA doesn’t cover information that, at the time of its signature, were already in the public domain, or that, after the signature, becomes of common knowledge other than by breach of the obligation of confidentiality by one of the parties. Or even those that are not expressly defined as confidential by law or by the NDA itself.
Its applicability is possible in different situations and to protect the most varied types of information. It can be signed, for example, in an M&A process, in the launch of a new product, in the admission of employees and/or suppliers, as well as in the search for potential investors.
Usually, the NDA is used in circumstances where companies are in discussion to formalize a joint agreement.
The NDA can be classified based on the number of parties to keep secret, which can be:
(i) Bilateral: when both parties undertake to maintain secrecy;
(ii) Unilateral: when only one of the parties undertakes to maintain secrecy; or
(iii) Multilateral: when each party involved undertakes to maintain secrecy, in addition to having different obligations in relation to each party.
Because of that, the content of the NDA must be specific, identifying in detail everything that must be characterized as confidential, as well as the parties, their rights and obligations, the duration of the contract and penalties in case of leakage of information covered by confidentiality.