What Is a Non-Disclosure Agreement (NDA)?

What an NDA actually is

A non-disclosure agreement (NDA), also called a confidentiality agreement, is a contract between two or more parties. Under it, at least one party promises to keep information disclosed by another party secret and not to share it with anyone else. This definition comes from the federal government’s Canadian Intellectual Property Office and applies the same way across Canada: the agreement itself is just a contract, and its core function is to convert an informal understanding about secrecy into an enforceable legal promise.

The information covered can be almost anything the parties agree to protect: a business plan, a customer list, a product design, or trade secrets discussed during a partnership negotiation. Because the definition is contractual rather than tied to a specific statute, NDAs are used the same way whether the parties are two companies, a business and a contractor, or an employer and an employee.

How NDAs are enforced

Even without an NDA, Canadian courts recognize a common-law and equitable action called breach of confidence. This doctrine applies federally and in both Ontario and Alberta. The Supreme Court of Canada, in Lac Minerals Ltd. v. International Corona Resources Ltd., held that receiving confidential information in circumstances of confidence creates a duty not to use that information for any purpose other than the one for which it was shared. If the information is misused and the party who disclosed it suffers a detriment as a result, that party is entitled to a remedy.

Courts applying this doctrine generally look for three things:

1. The information must have the necessary quality of confidence (it is not already public or trivial).
2. It must have been shared in circumstances that imported an obligation of confidence.
3. There must have been unauthorized use of the information causing detriment to the party who shared it.

A written NDA does not replace this doctrine; it reinforces it by spelling out, in advance, what counts as confidential and what the parties agree to do about it. That makes disputes easier to resolve because the parties do not have to argue from scratch about whether the circumstances “imported an obligation of confidence.”

NDAs in the employment context: Ontario’s rules

In Ontario, an NDA used in an employment contract is a clause or agreement that prohibits an employee from sharing confidential company information and processes. The Employment Standards Act, 2000 prohibits non-compete agreements, but it does not prohibit non-solicit agreements or non-disclosure agreements. That means an Ontario employer can still require an employee to keep company information confidential, even though it cannot generally stop that employee from working for a competitor afterward.

That said, the Ontario government’s own guidance notes that employees may have greater rights under the common law than the ESA sets out as a floor. The ESA not prohibiting NDAs is not the same as every NDA clause being automatically enforceable; the underlying breach-of-confidence principles (does the information have the necessary quality of confidence, was it shared in confidence, was there resulting detriment) still apply when a dispute over an employment NDA reaches court.

Where Alberta fits

No Alberta statute or leading case sets out a distinct legal test for NDAs separate from the general common law. Alberta’s Employment Standards Code, based on available guidance, does not contain a provision addressing non-disclosure agreements the way Ontario’s ESA guidance explicitly does for non-competes and NDAs. This means that in Alberta, an NDA’s enforceability turns on the same breach-of-confidence framework from Lac Minerals that applies federally and in Ontario, rather than on a separate provincial statutory rule. A reader dealing with an Alberta-specific NDA dispute should treat the common-law elements above (quality of confidence, circumstances of confidence, unauthorized use causing detriment) as the operative test, since no distinct Alberta statutory regime overrides it.