What is a non-disclosure agreement (NDA)?

A non-disclosure agreement (NDA) is fundamentally a legal contract that serves to protect sensitive information shared between parties. The primary purpose of such an agreement is to ensure that one party does not disclose confidential information to others without proper authorization. This type of agreement is especially important in business contexts where proprietary information, trade secrets, or other sensitive details are involved. By signing an NDA, the receiving party acknowledges their obligation to keep the information confidential and recognizes the potential legal consequences of failing to comply with this obligation.

The other options do not accurately reflect the function of an NDA. For instance, a legal contract that allows parties to share information freely would contradict the essence of an NDA, which specifically aims to limit the distribution of sensitive information. Similarly, a document outlining the terms of employment pertains to employment agreements, not confidentiality. Finally, a bylaw that governs corporate meetings is unrelated to the protection of confidential information and instead addresses the procedural aspects of corporate governance. Thus, the correct choice encapsulates the core intent and function of a non-disclosure agreement.