A Non-Disclosure Agreement (NDA) is a legal contract between parties that outlines confidential information shared between them and restricts the use or disclosure of that information to third parties.

Characteristics:
– Confidentiality: The primary purpose is to protect sensitive information from being disclosed.
– Parties Involved: Typically involves at least two parties, such as a business and a potential buyer or partner.
– Scope of Information: Clearly defines what information is considered confidential.
– Duration: Specifies how long the confidentiality obligation lasts, which can vary based on the nature of the information.
– Consequences of Breach: Outlines the penalties or legal actions that may result from violating the agreement.

Examples:
– A business owner shares financial statements and proprietary processes with a potential investor, requiring them to sign an NDA before any discussions.
– A technology company discloses its software development plans to a partner under an NDA to ensure that the partner does not share this information with competitors.