A Non-Disclosure Agreement (NDA) is typically used when one person gives another person information that cannot be passed on or made public. A Non-Disclosure Agreement will usually only provide a legal obligation for the person who receives the information to keep it secret. In some cases it is not only the information must be kept secret but the fact that the information was even passed along can be secret.
A common illustration of this type of agreement is when Company A employs B to do marketing for them. To help B to do the marketing, A may share trade secrets, for example a secret ingredient or other information such as where they source their product from in order to help B facilitate their marketing or any other task they are doing for Company A. This is information that A does not want the general public to know.
In this situation if Company A would like to, Company A can share with the world their secret ingredient or other information if they desire as it is private information relating to their business. However B must not share the information, B has only obtained it and been given the information for a specific purpose which is described in the agreement. The onus to keep the information secret is on the receiver of the information.
Confidentiality Agreement seen as stricter
A term that is similar in some respects is the term confidentiality. A Non-Disclosure Agreement is the same as a Confidentiality Agreement and often the terms may be used interchangeably. In both cases of a Non-Disclosure Agreement and a Confidentiality Agreement, the information exchanged or given can range from personal information to negative publicity, embarrassment or other undesirable outcomes for anyone involved.
One significant part of confidentiality is that in many cases, the fact that there was a dispute or settlement may itself be confidential. As an example, the fact that there is a dispute at all may be publicly undesirable. A common example of when this occurs is employment related settlements. There is, however, a view by some that confidentiality carries a higher degree of secrecy then non-disclosure but this is not the common view held by the legal profession in Australia.