Non-Disclosure Agreement for Third Party/Employee

A non-disclosure agreement (NDA) or a confidentiality agreement, is a contract between at least two parties that outlines confidential material and is invaluable if a party wants to protect confidential information.

Unlike other formal contracts, it does not necessarily include any consideration, rather depends upon one party that promises to keep the secret of the other. The reason for such agreement is for purely commercial benefits that both the parties might derive from mutual sharing of information.

As we know, the four necessary elements of a valid legal contract are:

• Agreement. A mutual agreement between the parties.
• Consideration. A promise supported by something of value being given in exchange.
• Contractual capacity. The parties are both legally capable of understanding, signing and entering into the contract.
• Lawful object. The object of the contract is lawful.

The most important component of an NDA is the clear identification of the parties. Contract law defines most parties to a contract as the offeror and the offeree. When drafting and signing these kinds of legal agreements, however, the parties are called the Disclosing Party and the Recipient or Receiving Party.

While preparing an NDA, and defining the parties involved, one must consider who else might be a party other than the aforementioned parties. If the Recipient intends on having their employees, partners or investors review your private information, the confidential information would be shared. Similar for any company unrelated to the Recipient party, such as a third-party developer, who might need to see the information.

Considering third parties are often involved, neglecting to include them in the agreement and having them sign it, could potentially cause huge trouble. By clearly defining all the parties involved in an NDA, the information can be kept confidential through legal binding.