Business Law · Haute Lawyer Network
What Is a Confidentiality Agreement?
Last reviewed: June 2026
A confidentiality agreement — also called a non-disclosure agreement or NDA — is a contract obligating one or both parties to keep specified information confidential and not to use it for purposes outside the scope of the agreement.
Confidentiality agreements are used throughout the business world — in employment, vendor relationships, M&A due diligence, licensing discussions, and any other context where sensitive information is shared.
A mutual confidentiality agreement — also called a mutual NDA or MNDA — obligates both parties to protect each other's information. A one-way confidentiality agreement obligates only the receiving party to protect the disclosing party's information.
Key provisions include the definition of what constitutes confidential information, the obligations of the receiving party, exceptions to confidentiality (publicly available information, independently developed information, information required to be disclosed by law), the term of the agreement, and remedies for breach.
Frequently Asked Questions
How is a confidentiality agreement different from a trade secret?
A confidentiality agreement is a contractual obligation to keep information secret. Trade secret protection is a property right in the information itself — enforceable even without a contract through trade secret statutes. Strong confidentiality protections through agreements are one of the requirements for maintaining trade secret status.
What is a standard term for a confidentiality agreement?
Varies by context. Employment NDAs covering true trade secrets are often perpetual. NDAs for M&A due diligence typically run 2-3 years. The appropriate term should reflect the nature of the information and how long it is likely to remain competitively sensitive.
Can a confidentiality agreement prevent an employee from reporting illegal conduct?
Federal law and most state laws protect employees who report illegal conduct to government agencies — confidentiality agreements that attempt to prevent such reporting are unenforceable for that purpose.
What happens when a confidentiality agreement is breached?
The disclosing party can seek an injunction to stop further disclosure, compensatory damages for harm caused by the breach, and in cases of egregious breach, punitive damages and attorney fees if the agreement provides for them.
Is a verbal confidentiality agreement enforceable?
In theory yes, but verbal agreements are difficult to prove and enforce. Written confidentiality agreements with clear terms are strongly preferred.
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