Confidentiality Agreement / NDA
A contractual obligation by one or more parties to maintain the secrecy of specified information, prohibiting unauthorized disclosure or use beyond defined permitted purposes. Operates as the primary contractual layer of trade secret protection and as a foundation for noncompete enforceability.
A confidentiality agreement (or non-disclosure agreement, "NDA") is a contractual obligation by one or more parties to maintain the secrecy of specified information, prohibiting unauthorized disclosure or use beyond defined permitted purposes. NDAs operate as the primary contractual layer of trade secret protection and as a foundation for noncompete enforceability.
Core elements
A typical confidentiality agreement specifies: (1) what information is "Confidential Information" (definition often broad, including a non-exhaustive list with carve-outs for publicly-known and independently-developed information); (2) permitted uses; (3) restrictions on disclosure to third parties; (4) protection measures the recipient must take; (5) duration; (6) return or destruction obligations on termination; (7) remedies for breach (typically including injunctive relief).
Standard carve-outs
Most NDAs exclude from the confidentiality obligation: (1) information already known to the recipient; (2) information that becomes publicly known through no fault of the recipient; (3) information independently developed without reference to the disclosed information; (4) information lawfully received from a third party. Disclosure required by law (subpoena, regulatory order) is also typically permitted with notice obligations.
Mutual vs. unilateral
Unilateral NDAs flow from a single discloser to a single recipient (typical for employer-employee or vendor relationships). Mutual NDAs flow both directions (typical for M&A diligence, joint ventures, technology partnerships). The structure usually tracks the actual information flow.
The confidentiality agreement is foundational. Under TUTSA, information is a trade secret only if the owner has taken "reasonable measures under the circumstances" to keep it secret (Tex. Civ. Prac. & Rem. Code § 134A.002(6)). A confidentiality agreement is evidence of those measures, although the statute does not require one. Under Tex. Bus. & Com. Code § 15.50, an employer's provision of confidential information in exchange for the employee's promise not to disclose it can supply the agreement to which a noncompete is ancillary (Alex Sheshunoff Management Services, L.P. v. Johnson, 209 S.W.3d 644 (Tex. 2006)).