In business, there may be many situations when one company needs to disclose sensitive information to another individual or company in order to execute important strategies. This information may include anything from sales forecasts to new product designs and more. The company who must share these details has a logical need to protect themselves by safeguarding the information so it is not used against them. Hence, the nondisclosure agreement was created.

According to Forbes, there are many provisions that a good NDA, or confidentiality agreement, should include. One of these is a clear conflict resolution path and set of terms should the two parties ever dispute the adherence or lack thereof to the contract. Another thing that companies should do when drafting a nondisclosure agreement is to be as specific as possible about what information is considered confidential and within the scope of the agreement. When terms are too broad, the door to interpretation and therefore to conflict is opened. A defined timeline during which the agreement is valid is also recommended.

Harvard Business Review notes that many companies today require their employees to sign confidentiality agreements. This practice has come under scrutiny as some people and groups allege that these contracts may prevent a person from reporting unethical or illegal actions.

Another complaint regarding NDAs with employees indicates that these contracts may be too restrictive and all but prevent a person from furthering their career by accepting a job with another company. Businesses looking to protect themselves and their sensitive information must carefully evaluate the terms of these agreements to ensure they are drafted prudently and reasonably.