When should a nondisclosure agreement be signed?

A person or business should have the opposing party sign a nondisclosure agreement (NDA) whenever confidential information is likely to be shared with that party and further disclosure of the information could cause commercial or reputational harm. Examples include signing an NDA (1) with a prospective employee before they are hired; (2) with an employee before they are promoted to a new position; (3) with a customer, vendor, or business partner prior to contract negotiations; or (4) before a business is bought or sold.