Which statement best defines a nondisclosure agreement?

• A. It prohibits disclosure of confidential information and trade secrets
• B. It restricts an employee from working for a competitor after leaving
• C. It requires annual performance reviews
• D. It sets salary schedules

Answer: (A)

An NDA protects sensitive information by creating a promise not to reveal what is confidential. It’s used whenever two parties—such as an employer and an employee or a contractor—need to share trade secrets, client lists, product designs, or business strategies and want to prevent others from learning them. The core idea is to restrict disclosure, not to regulate hiring, competition, performance evaluations, or pay. That’s why this statement is the best match: it directly describes prohibiting disclosure of confidential information and trade secrets. The other ideas describe different tools—restricting where you can work after leaving, outlining performance review processes, or setting salary structures—and don’t define an NDA.