In the context of manufacturing, a non-disclosure agreement (NDA) is an agreement between a manufacturer and a business or individual that legally prevents the manufacturer from revealing trade secrets or other sensitive information to the public.

NDAs are used in the manufacturing world as a way to protect the intellectual property (IP) of a business or individual, ensuring that product designs do not end up in the hands of a competitor. Should that situation arise, the IP would lose its value, potentially costing the business or individual significant earnings.

NDAs are signed by both the manufacturer and the client, and are legally recognized by courts — though different countries have different laws regarding IP and non-disclosure. It is therefore important to ensure that an NDA is tailored to suit the needs of the product, but also the jurisdiction in which it is being manufactured.

An NDA is essential for several reasons. The primary purpose of an NDA is to prevent a manufacturer from leaking secret information to the public, which would potentially nullify the value of a product. By asking a manufacturer to sign an NDA, a business or individual can effectively secure its IP, ensuring that trade secrets are kept within the factory and not disclosed to actual or potential competitors.

But an NDA can provide other essential functions too. In addition to safeguarding against disclosure, an NDA can be used to prevent a manufacturer from using IP and trade secrets in other ways. For example, the agreement can legally prevent a manufacturer from fabricating and keeping its own copies of a product — something it would be able to do without technically disclosing information to the public.

Although writing an NDA can seem like a daunting task, doing so is vital in order to prevent potential monetary losses. Furthermore, it is essential to sign an NDA before any exchange of trade secrets or other IP takes place. If such an exchange takes place before an NDA is completed and signed, the terms of the agreement may not hold for the information traded previously.