Non-Disclosure Agreement (NDA)
A mutual or one-way NDA for protecting confidential business information shared between parties.
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A non-disclosure agreement (NDA) — also called a confidentiality agreement — is a legally binding contract in which one or both parties agree to keep certain information confidential and not to disclose it to third parties without authorization. NDAs are one of the most widely used commercial contracts in Canada, and are standard practice before business negotiations, partnerships, employment of key staff, and product development discussions.
Mutual vs. one-way NDAs
A mutual NDA protects both parties' confidential information and is appropriate when both sides will be sharing sensitive information — for example, in a business acquisition negotiation. A one-way NDA protects only one party's information and is used when only one side is disclosing — for example, when hiring a contractor or disclosing a business idea to a potential investor.
Enforceability
To be enforceable, an NDA must define the confidential information precisely enough to put the recipient on notice, specify the duration of the obligation, and set out reasonable exceptions (such as information already in the public domain). Overly broad NDAs that restrict all communication or last indefinitely may not be upheld by Canadian courts.