This agreement should be used in situations where two parties wish to discuss e.g. the prospect of working together at some point in the future and as a result of this, both parties will have access to confidential information relating to the other due to each of the parties disclosing confidential information to the other.
This agreement sets out the understanding that neither company will use the other’s confidential information to their own benefit. It also makes clear that neither company will divulge any sensitive/ commercial information about the other to a third party during the term when the obligations of confidentiality subsist.
Note that a Non-Disclosure Agreement (otherwise known as an NDA) is merely a pre-cursor to a main agreement (e.g. a Sale of Services (Master Services) Agreement or a Services Agreement (Order Form and Basic Terms)) and merely protects confidential information (however that may be defined therein) and does not represent anything more than this. However, it is essential especially where discussions and disclosures are of a confidential nature and do NOT progress in to a working and contractual relationship thereafter for whatever reason.