Encyclopedia
Non-disclosure agreement (NDA) / confidentiality agreement (CA)
A contract to keep information confidential.
For example: A buyer signs an NDA before getting a business's financials. (Illustration only, not a real deal.)
This is a general industry term with no single official definition. Your lease or contract wording controls.
Example only, not a real client. Say you want details on a business and its building that are not publicly listed. The seller asks you to sign a confidentiality agreement first. You read it, confirm you can share the information with your lender and lawyer, and then sign.
What I’d tell a friend
Read a confidentiality agreement before you sign it, and make sure you can share information with your advisors.
Why it matters to you
Sellers should require one before sharing financials, leases or customer lists. If word gets out that a business is for sale, staff, customers and suppliers can get nervous, and the deal may not even close.
How to use it in your deal
Sellers should limit what's shared until the buyer signs, and say who the buyer can share with: lenders, lawyers, accountants. Include a no-contact clause for tenants, staff and suppliers. Buyers should check that the term isn't endless and that they can still use information they already had. Both sides should get a lawyer to read anything unusual, like a non-solicit.
Read the non-solicitation clause, which may stop you hiring the seller's staff or approaching its tenants for a period. Check how long confidentiality lasts and what you must do with documents if the deal dies. Sellers should list who in the buyer's team can see information, including lenders and advisors. Keep a signed copy, and don't forward data room material to anyone not covered by the agreement.
Mistakes I see
Sharing the rent roll or financials before signing. Buyers calling tenants directly. Signing an NDA with a non-solicit that stops you hiring anyone in the industry.
In BC and Vancouver
Contract law governs; no BC statute covers NDAs. BC courts enforce reasonable confidentiality terms.
Official sources: CanLII (court decisions)
What it is
A non-disclosure or confidentiality agreement is a contract where you agree to keep information private and use it only to evaluate a deal.
Sellers use them to protect tenants, staff and business details.
What to check
Check who you may share information with, how long the duty lasts and whether there are restrictions on contacting tenants, staff or suppliers.
Ask a BC lawyer about terms that seem broad, such as non-solicitation or penalties.
Questions to ask before you sign
- Who can I share this with?
- How long does it last?
- Can I contact tenants or staff?
- Does it include a non-solicit?
- What happens to the documents if the deal dies?
Keep reading
Related terms: Data room, Offering memorandum (OM)
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General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.