A nondisclosure agreement is a contract where a receiver of confidential, proprietary information, promises to not disclose that information without authorization, according to Nolo's Plain English Law Dictionary. A nondisclosure agreement protects trade secrets or business ideas where some exchange is desired in order to explore that confidential information.
FindLaw's article on how and when to use a nondisclosure agreement (also known as an NDA) advises that it should be in writing and should spell out clearly what information is confidential and for how long. In addition, a nondisclosure agreement can restrict what use a receiver can make of the confidential information, provide for return or destruction of information or materials received, and select a forum for dispute resolution.
Carefully reviewing the agreement's language is recommended by FindLaw to ensure the nondisclosure agreement creates no unintended exceptions. The owner of confidential information should take all reasonable steps to protect the secrecy of the information because if it is publicly available, it can no longer be considered proprietary.
Nondisclosure agreements can be mutual or unilateral, as is frequently seen in employee agreements for high-tech companies, FindLaw points out. If a nondisclosure agreement is breached, a person can obtain a court order to stop further disclosures. In addition, individuals can obtain monetary damages for any monetary losses.