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The agreement should identify the purpose to which the recipient can put the confidential information. All other uses of the confidential information should be prohibited.
An NDA may also be referred to as a confidentiality agreement. Non-disclosure agreements are common for businesses entering into negotiations with other businesses. They allow the parties to share sensitive information without fear that it will end up in the hands of competitors.
The document is exchanged after the prospective buyer shows interest in a company after looking at the teaser of the target. The objective of the NDA is to make sure that the party receiving confidential information doesn't use that information against the target company for its own benefit.
A confidentiality agreement is a standard written agreement that is used to protect the owner of an invention or idea for a new business. It is also an important document between two companies that are contemplating a merger or a commercial transaction that must be withheld from public knowledge.
Confidentiality of the Agreement The parties agree that the terms and provisions of this Agreement shall be kept confidential and shall be disclosed only to those persons and entities as required by law or as permitted by the other party hereto.
In the due diligence context, the free flow of information is necessary to enable parties to a transaction to meaningfully evaluate whether to proceed. Confidentiality agreements provide the legal and logistical framework for this information exchange.
When should you use each? A non-compete agreement is only used between an employee and a business to specify who may hire them should they leave the company. An NDA is much broader and is used to protect any personal or business-related information that one or both parties want to remain confidential.
A confidentiality agreement for due diligence purpose is an agreement between two or more parties to keep something confidential for the purpose of due diligence.