Explain the purpose of a non-disclosure agreement (NDA).

• A. To define the protocol for data analysis
• B. To prohibit individuals from sharing confidential information
• C. To establish employment terms
• D. To protect against intellectual property theft

Answer: (B)

A non-disclosure agreement (NDA) serves the primary purpose of prohibiting individuals from sharing confidential information. NDAs are crucial in various business contexts, particularly when sensitive information must be shared between parties, such as during negotiations, collaborations, or partnerships. By signing an NDA, parties agree to keep specific information private and refrain from disclosing it to unauthorized individuals or entities.

This legal contract helps protect the proprietary, sensitive, and confidential aspects of a business, such as trade secrets, customer data, or internal processes, ensuring that the information does not become public or reach competitors. As a result, NDAs are essential for maintaining trust and safeguarding the interests of the disclosing party.

While the other options mention relevant aspects of business and legal agreements, they do not encompass the primary function of an NDA. For instance, defining protocols for data analysis and establishing employment terms may involve NDAs but do not represent the core purpose of such agreements. Protecting against intellectual property theft is also a valid concern, but NDAs specifically address confidentiality rather than the broader concept of intellectual property rights.