Some information is valuable in and of itself. Businesses, individuals and organizations that want to protect valuable information can use a nondisclosure agreement. Three-party NDAs are simply those to which three people or organizations agree. Talk to a lawyer if you need legal advice about NDAs or their use.


A nondisclosure agreement, sometimes known as a confidentiality agreement, allows parties with sensitive or valuable information to reveal that information to others without risking the other party using it for its own purposes. If you enter into an NDA and later violate the agreement by revealing the confidential information to others or use it for your own purposes, the party that revealed the confidential information to you can take you to court, sue you for damages and ask the judge to order an injunction -- a court ruling ordering you to stop using the information,

One-Way and Two-Way NDAs

A one-way NDA is one in which one party, the one disclosing the information, requires the recipient to sign the NDA so the recipient cannot use or reveal to other people any confidential information the disclosing party reveals. Two-way NDAs impose the same restrictions, but they bind both parties, meaning neither can use or reveal confidential information the other reveals. One- and two-way NDAs are commonly used in negotiations, intellectual property discussions and other settings where parties talk about valuable information.

Three-Party NDA

A three-party NDA, also called a three-way NDA, binds three parties. These agreements can be used, for example, by an inventor who wants to talk about his idea with a manufacturing company and a marketing company at the same time. Like other NDAs, the three-way NDA allows all parties present at the meeting or in the negotiations to discuss the confidential idea freely and without worrying that the other parties will take their idea or violate their rights.

Requirements and Enforcement

A nondisclosure agreement is a contract. While you can enter into a valid and enforceable contract with a verbal agreement, NDAs are best when they are in writing and spell out in detail the limitations of the agreement and when each party signs the document in the presence of one another. If someone violates the terms of the agreement, the other parties can then take the violator to court and use the NDA as evidence. As long as the contract was entered into legally, the court will enforce the terms of the nondisclosure agreement.