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Confidentiality and Nondisclosure Agreements Explained

August 9, 2023

In a confidentiality or non-disclosure agreement, parties agree to keep private nonpublic information received during a business relationship, including in the early stages of exploring a potential business relationship. The need for confidentiality and non-disclosure agreements arises in a wide variety of contexts, including mergers and acquisitions, joint ventures, sales and services, employment, and intellectual property licensing.

Once parties have established an ongoing business relationship, non-disclosure provisions are often negotiated and incorporated into the relevant transaction documents, which may replace stand-alone agreement, and are incorporated into the larger contract management workflow for the remainder of the contract lifecycle.

[Download this sample mutual non-disclosure and confidentiality agreement that can be adapted for your individual needs.]

What is a confidentiality agreement?

Confidentiality agreements protect parties entering into business relationships or transactions that require the exchange of sensitive, private information otherwise inaccessible to third parties. Confidential information is the heart of any confidentiality agreement. For the agreement to adequately protect against unwanted disclosure, the parties must clearly describe the information or types of information they wish to protect and the scope of each party’s non-disclosure obligation.

The provider of confidential information typically wants to define its confidential information as broadly as possible to include all material shared with the recipient. The recipient, on the other hand, must be careful to carve out any information from the definition that the recipient may later be legally required to disclose; otherwise, the recipient risks choosing between breaking the law and breaking its confidentiality obligation.

Parties may also wish to expressly carve out personal data from the definition of confidential information and negotiate separate terms that govern the use and protection of such data, as applicable privacy and data security laws tend to be much stricter than general confidentiality requirements.

Is a non-disclosure agreement the same as a confidentiality agreement?

Non-disclosure agreements (NDAs) and confidentiality agreements are both legal contracts between two or more parties that specify the criteria for maintaining the confidentiality of certain information. Whereas NDAs are often used in business and legal settings to protect trade secrets, client lists, and financial data, confidentiality agreements are typically devised in employment or personal situations to protect sensitive information.

Confidentiality and non-disclosure agreements typically:

• Describe the context for the parties’ agreement, referencing any related transactional documents.
• Define the specific information to remain confidential.
• Outline the parameters for the parties’ use of confidential information.

Do confidentiality agreements expire?

Most confidentiality and non-disclosure agreements provide a specific term of non-disclosure (e.g., one to three years). Some confidentiality and non-disclosure agreements, on the other hand, are open-ended in duration, although they will not be legally enforceable to the extent the confidential information becomes public. Because a confidentiality or non-disclosure covenant will not be enforceable if the confidential information enters the public domain, parties often qualify that the confidentiality obligation applies only while the information remains nonpublic.

Having a reasonable duration is particularly important in employment-related agreements. Employers must balance their legitimate business need for confidentiality against employees’ rights to engage in protected concerted activity, such as discussing the terms and conditions of their jobs. For example, the duration of employees’ confidentiality obligations related to an internal investigation may be deemed as overly restrictive if it exceeds the duration of the investigation. In addition, various states have laws that limit the ability of employers to require their employees to sign non-compete agreements , which are generally used to prevent the use of information or know-how by former employees in a way that may unfairly benefit a competitor.

What are the limits of confidential information?

Confidentiality and non-disclosure agreements may include a unilateral covenant governing one party’s access to and use of confidential information, or they may contain mutual obligations of the parties to keep each other’s confidential information private. The typical confidentiality obligation imposes a duty to use confidential information only for its intended purpose. The agreement may allow limited disclosure of confidential information to designated agents or advisers if these third parties are made aware of the duty of confidentiality and acknowledge their duty to observe it. The duty of confidentiality generally requires the non-disclosing party to keep the information secure, exercising the same level of care as that used for its own confidential information. A confidentiality or non-disclosure agreement may prohibit confidential information from being copied and may require confidential material to be returned or destroyed when no longer needed or the agreement is terminated.

A standstill provision prevents the party receiving confidential information of a company from engaging in a hostile acquisition transaction or taking steps towards a hostile acquisition transaction for a period (often one to three years) or, if applicable, for so long as the recipient party holds at least a certain percentage of that company’s shares (typically 5%).

As an example, standstill provisions are common in private investments in public equity (PIPE) transactions when PIPE investors receive material confidential information, or in acquisition transactions when acquirers receive confidential information, in each case prior to the parties entering into definitive transaction documents. The recipient party may argue that a standstill provision isn’t necessary due to the restrictions placed on its use of confidential information. However, the party providing confidential information may argue that it is easier to prove that a standstill provision has been breached than it is to prove that its confidential information was wrongfully used in formulating the terms of a hostile transaction.

Equitable relief

Confidentiality and non-disclosure agreements frequently provide that money damages alone are an inadequate remedy for breach of the agreement, so equitable relief (including injunctions) is deemed the more appropriate enforcement mechanism.

How do you write a confidentiality agreement?

Confidentiality agreement template.

A reciprocal, or “mutual,” non-disclosure and confidentiality agreement (also commonly titled simply a “non-disclosure agreement” or a “confidentiality agreement”) provides protection to individuals and companies from the misappropriation or unauthorized disclosure of information revealed in confidence or for a limited purpose. It is used in situations where both parties to an agreement contemplate disclosing company-private information in connection with a commercial opportunity, collaboration, or proposed transaction. Download the full confidentiality agreement sample here.

WHEREAS , the Parties desire to explore further potential opportunities or transactions involving [Describe Opportunity or Transaction Generally] (the “ Purpose ”);

WHEREAS , in connection with such [Purpose] [proposed commercial relationship], each of the Parties wishes to receive a disclosure of valuable proprietary or confidential information of the other, and is willing to ensure that such information will be treated as confidential and used only as permitted by the terms of this Agreement.

NOW THEREFORE , in consideration of the mutual covenants, promises, representations, and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definitions

For purposes of this Agreement, the following terms shall have the meanings set forth below:

1.1 “ Affiliate ” means with respect to any entity, any other entity that controls, is controlled by or is under common control with such first entity.

1.2 “ Confidential Information” means information furnished by the disclosing party, whether orally, in writing, electronically, in other tangible form or format, or through or by observation, and identified as confidential or proprietary or otherwise disclosed in a manner such that a reasonable person would understand its confidential nature.

(a) Confidential Information includes, without limitation,

(i) information that is related to products, product plans, services, service plans, market studies, reports, documentation, drawings, computer programs, software code (object or source codes), inventions (whether patentable or not), concepts, designs, flow charts, diagrams, product specifications, formulas, data, schematics, customer and supplier lists, price lists, designs, creations, models, business materials, work-in-progress, methods of manufacture, technical information, know-how, improvements, and Trade Secrets (as defined in Section 1.4 below);

(ii) all information relating to the disclosing party or the business, business plans, markets, condition (financial or other), operations, assets, liabilities, results of operations, forecasts, strategies, cash flows or prospects of the disclosing party (whether prepared by the disclosing party, its advisors or otherwise), historical or projected financial statements, budgets, sales, capital spending budgets, plans, or identities of key personnel; and

(iii) any information about or concerning any third party (which information was provided to the disclosing party subject to an applicable confidentiality obligation to such third party) in each case disclosed or furnished by or on behalf of the disclosing party before, on or after the date hereof, whether or not marked or designated as confidential or proprietary.

(b) Notwithstanding the foregoing, information shall not be considered Confidential Information for purposes of this Agreement, which can conclusively be demonstrated by independent written files or records if:

(i)  the receiving party or its Affiliates already possess the information without an obligation of confidentiality at the time of disclosure;

(ii)  the information is or becomes generally available to the public other than as a result of an unauthorized disclosure of such information or a violation of this Agreement by the receiving party or its Affiliates;

(iii)  the information has been or is made available to the receiving party or its Affiliates by a third party that, to the receiving party’s or its Affiliates’ knowledge, is not under an obligation of confidentiality to the disclosing party or its Affiliates; or

(iv)  the information is independently developed by the receiving party or its Affiliates without violating any obligations in this Agreement.

1.3 “ Records ” or “ records ” means and includes writings, spreadsheets, presentations, web pages, emails, voicemails, drawings, graphs, charts, photographs, sound recordings, optical or magnetic disks, and data compilations in whatever form recorded or stored from, which information can be obtained and/or translated, if necessary, into reasonably usable form, and any reproductions thereof.

1.4 “ Trade Secret(s) ” means any information (a) that is actually secret; (b) where the disclosing party has taken reasonable measures to maintain its secrecy; and (c) where independent economic value is derived from that secrecy.

2. Mutual obligations of confidentiality and non-disclosure

For a period of [Number (#)] years following the disclosure of Confidential Information, and for an indefinite period of time following the disclosure of Trade Secrets, the receiving party shall:

2.1 receive and hold the Confidential Information in strict confidence;

2.2 take such steps as may be reasonably necessary to prevent the disclosure of Confidential Information using not less than the same degree of care that the receiving party uses to prevent the unauthorized use, dissemination, or publication of its own most valuable confidential and proprietary information (but with at least the same degree of care used by a reasonably prudent business person);

2.3 not disclose such Confidential Information to any third party for any purpose whatsoever without (a) the prior written approval from the disclosing party; and (b) the agreement on the part of such third party to be bound by the restrictions on use and non-disclosure set forth in this Agreement; provided, however, that the receiving party may disclose Confidential Information to the receiving party’s Representatives (as defined herein), who are bound by the confidentiality and use provisions of this Agreement;

2.4 not permit access to the Confidential Information to anyone other than employees, officers, directors, advisors, and consultants of the Parties or their Affiliates (collectively, the “ Representatives ”) and then, only to the extent those individuals (a) need to know the Confidential Information to carry out the Purpose; (b) are informed by the receiving party of the confidential nature of the Confidential Information; and (c) are bound by the terms of their employment or engagement to treat the Confidential Information in a manner consistent with the terms of this Agreement;

2.5 not disclose, or permit any of its Representatives to disclose, without the prior written consent of the disclosing party, to any other person the fact that the Confidential Information has been made available, that discussions or evaluations are taking place concerning the Purpose, or any of the terms, conditions, or other facts with respect thereto;

2.6 acknowledge that the Confidential Information is, and will at all times remain, the exclusive property of the disclosing party; and

2.7 use the disclosing party’s Confidential Information only for the strictly limited Purpose and for no other purpose whatsoever. Notwithstanding the foregoing provisions of this Section 2, the receiving party is specifically prohibited from (a) using, directly or indirectly, any of the Confidential Information furnished to it hereunder for its own benefit or for the benefit of others, except for the Purpose as set forth above; or (b) creating any improvements, modifications, or derivative or related works or materials which incorporate or utilize, directly or indirectly, any Confidential Information (such improvements, modifications, derivative or related works, if any, receiving party acknowledges and agrees shall be deemed Confidential Information of the disclosing party).

3. Compelled disclosure

Notwithstanding the foregoing, if the receiving party is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand, or other process) to disclose any Confidential Information, it will provide the disclosing party with prompt notice of such request so that the disclosing party may seek an appropriate protective order and/or waive compliance herewith. If, in the absence of such protective order or waiver, the receiving party is compelled to disclose Confidential Information to any tribunal or other authority, the receiving party shall (a) disclose only that part of the Confidential Information that, in the opinion of its legal counsel, is required to be disclosed; (b) deliver to the disclosing party written notice of the Confidential Information to be disclosed as far in advance of its disclosure as is practicable; and (c) use commercially reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed.

4. Return of materials

Upon request of the disclosing party, in the disclosing party’s sole discretion, the receiving party shall either return to the disclosing party or destroy all documents and other writings supplied by the disclosing party, together with all copies of any such documents or other writings, and shall certify to the return or destruction of all tangible Confidential Information and references thereto and the destruction of any references thereto on magnetic or other intangible media. In addition, that portion of the Confidential Information which consists of analyses, compilations, data, studies, or other documents prepared by the receiving party or its Representatives will be immediately destroyed at the written request of the disclosing party and such destruction will be confirmed to the disclosing party in writing. The return to the disclosing party or destruction of such Confidential Information shall not relieve the receiving party of any obligation of confidentiality contained herein.

5. Injunctive relief

The Parties acknowledge that money damages will be both incalculable and an insufficient remedy for a breach of this Agreement by either Party. Accordingly, the Parties agree that, in the event of any breach of this Agreement, the non-breaching Party shall be entitled to equitable relief, including, without limitation, injunctive relief or specific performance. If either Party elects to seek injunctive relief for breach of this Agreement, such election shall not preclude the non-breaching Party from pursuing other legal remedies at law. Notwithstanding Section 10.5, below, regarding choice of forum, the Parties agree that equitable relief may be sought in any court of competent jurisdiction for the sake of expediency.

6. No representation or warranty

The Parties understand, acknowledge, and agree that neither the disclosing party nor its Representatives is making any representation or warranty as to the accuracy, reliability, or completeness of any Confidential Information and that neither the disclosing party nor its Representatives shall have any responsibility or liability (including, without limitation, in contract, tort, or otherwise) to the receiving party or any of its Representatives arising from use or reliance on the Confidential Information. THE DISCLOSING PARTY PROVIDES THE INFORMATION SOLELY ON AN “AS IS” BASIS.

The term of this Agreement shall be [Number (#)] years from the Effective Date unless extended or terminated earlier in accordance with the provisions of this Agreement. Either Party may terminate this Agreement by providing thirty (30) days written notice to the other. Neither the termination nor expiration of this Agreement shall affect the obligations of the Parties set forth in Section 2, Mutual Obligations of Confidentiality and Non-Disclosure.

Except as may be otherwise provided herein, all notices, requests, waivers, and other communications made pursuant to this Agreement must be in writing and are conclusively deemed to have been duly given (a) when hand delivered to the other Party; (b) when received if sent by facsimile or electronic mail to the number or the email address set forth below, provided that the sending Party receives a confirmation of delivery; (c) three (3) business days after deposit in the U.S. mail, with first class or certified mail, receipt requested, postage prepaid, and addressed to the other Party; or (d) forty-eight (48) hours after deposit with an internationally recognized overnight delivery service, postage prepaid, addressed to the other Party as set forth below with next business-day delivery guaranteed, provided that the sending Party receives a confirmation of delivery from the delivery service provider. A Party may change or supplement the addresses, facsimile numbers, and email addresses provided in its signature block below, or designate additional addresses, facsimile numbers, or email addresses, for purposes of this Section by giving the other Party written notice of the new address, facsimile numbers, or email addresses in the manner set forth above.

If to Party A: [Address and electronic coordinates]

If to Party B: [Address and electronic coordinates]

9. No binding agreement for transaction

Unless and until a definitive agreement is entered into, neither Party will be under any legal obligation of any kind whatsoever to proceed with respect to a potential business transaction or venture in whole or in part or to continue discussions relating thereto by virtue of (a) this Agreement; or (b) any written or oral expression with respect to a potential transaction by either Party or any of their respective Representatives. The Parties further understand and agree that they shall not have any claims whatsoever against the other Party or the other Party’s Representatives arising out of or relating to the possible business relationship or any potential or actual transaction unless otherwise provided in a definitive agreement.

10. Miscellaneous

10.1 This Agreement shall be binding upon the successors and assigns of the Parties hereto.

10.2 No patent, copyright, trademark, or other proprietary right is licensed, granted, or otherwise transferred directly, or by implication, estoppel, or otherwise, by this Agreement or any disclosure hereunder, except for the right to use such information in accordance with this Agreement.

10.3 It is understood and agreed that no failure or delay by either Party in exercising any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power, or privilege thereunder.

10.4 The laws of the [State/Commonwealth] of [State], without giving effect to its conflicts of law principles, govern all matters arising out of or relating to this Agreement, without limitation, its validity, interpretation, construction, performance, and enforcement.

10.5 Each Party hereto unconditionally consents to the personal jurisdiction of the state or federal courts located within the [Jurisdiction] for any actions, suits, or proceedings arising out of or relating to this Agreement and, subject to and except as provided in Section 5 hereof regarding equitable actions, each Party agrees not to commence any action, suit, or proceeding relating thereto except in such courts. Each Party unconditionally waives and agrees not to plead in any such court that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum.

10.6 The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect. If any of the covenants or provisions of this Agreement shall be deemed to be unenforceable by reason of its extent, duration, scope, or otherwise, then the Parties contemplate that the court making such determination shall reduce such extent, duration, scope, or other provision, and shall enforce them in their reduced form for all purposes contemplated by this Agreement.

10.7 This Agreement embodies the entire understanding and agreement between the Parties with respect to the subject matter hereof and supersedes any prior written or oral understandings and agreements relating thereto.

10.8 This Agreement may not be amended or modified except in writing executed by both Parties. This Agreement and any such written amendment or modification may be executed in counterparts.

10.9 Neither Party shall assign this Agreement or any rights provided under this Agreement without the prior written consent of the other Party. Any such attempted assignment shall be null and void. Neither Party shall delegate or subcontract any obligation or performance under this Agreement without the prior written consent of the other Party, and any such attempted delegation or subcontract shall be void.

10.10 No agency or partnership relationship is created between the Parties by this Agreement.

IN WITNESS WHEREOF , each the Parties hereto has caused this Agreement to be executed by a duly authorized representative as of the Effective Date.

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What does Assignment Mean in a Non-Disclosure Agreement?

Understanding Assignment in Non-Disclosure Agreements

Definition of assignment, implications of assignment in ndas, using doclime for nda review.

In the realm of legal agreements, a Non-Disclosure Agreement (NDA) is a crucial document used to protect sensitive information from being divulged to unauthorized parties. An important term often found in NDAs is “assignment.” But what does assignment mean in the context of a Non-Disclosure Agreement?

When referring to assignment in an NDA, it typically involves the ability of one party to transfer or delegate its rights and obligations under the agreement to another entity or individual. This transfer of rights could include the disclosure of confidential information to a third party for specific purposes outlined in the agreement.

The inclusion of an assignment clause in an NDA provides flexibility to the parties involved in the agreement. It allows for the possibility of subcontracting or collaborating with third parties while still maintaining the confidentiality of sensitive information. However, it is crucial that the terms of assignment are clearly defined in the NDA to prevent any misuse or unauthorized disclosure of confidential data.

For real estate professionals and individuals dealing with NDAs, leveraging AI tools like Doclime can streamline the process of reviewing and understanding complex legal documents. Doclime enables users to upload NDAs, ask specific questions about assignment clauses, and receive instant answers supported by relevant information and citations from the document.

While Doclime does not provide legal advice, it plays a pivotal role in expediting the contract review process by offering valuable insights and information much faster than traditional manual methods. By utilizing Doclime, professionals can ensure thorough scrutiny of NDAs, including the intricate details of assignment clauses, without the laborious task of sifting through documents manually.

In conclusion, understanding the concept of assignment in a Non-Disclosure Agreement is essential for safeguarding confidential information and maintaining transparency in business dealings. With the assistance of advanced AI tools like Doclime, the process of NDA review becomes more efficient and effective, benefiting users in various industries, including real estate professionals and individuals seeking quick access to critical information within legal documents.

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Non-Disclosure Agreement (NDA)

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What is a non-disclosure agreement?

A non-disclosure agreement (NDA), also known as a confidentiality agreement, is a document used when two people or companies enter into a new business relationship and would like to protect confidential information. In the course of that relationship, the parties will likely reveal sensitive information, such as trade secrets, to each other. The NDA prevents the sharing of that sensitive information with outside third parties . This helps both parties feel more comfortable revealing this information and allowing each other necessary access so that commercial negotiations and collaboration can continue openly and honestly.

What is the difference between a non-compete agreement and a non-disclosure agreement?

Though both documents are used in business relationships, they constrain parties in different ways. A non-compete agreement prevents an employee from leaving their employer to start a competing business in the same industry and same geographic location. It is not about the disclosure of information but instead about the i nitiation of competition . A non-disclosure agreement stops someone from sharing specific business secrets and practices outside the business relationship.

Is it mandatory to have a non-disclosure agreement?

No, in most situations, it is not mandatory to use an NDA. Businesses are able to freely share information with each other without restrictions. NDAs are not necessary when the information being shared is already public or the parties are having a basic business interaction that does not include sharing sensitive information. However, in some specific circumstances, in particular industries such as healthcare, protecting certain information is legally required. Using an NDA can be part of that compliance.

What are "trade secrets"?

Trade secrets are information about any formula, process, or method that is not widely known by the public and a business uses for an economic advantage. For example, trade secrets could be particular recipes, manufacturing processes, or design details.

What must a non-disclosure agreement include?

A valid non-disclosure agreement must contain at least the following mandatory clauses:

• Identifying information : The NDA should include the name, address, and contact information for all the involved parties. The NDA also specifies whether one or both of the parties is having their information protected from disclosure.
• Purpose : The non-disclosure agreement outlines the specific purpose for its creation, whether that be employment, a new business partnership, the sale of a business, or some other reason. This section also describes whether trade secrets that are being protected.
• Term : The NDA specifies the length of time during which the parties are bound by the agreement and must refrain from disclosure. This may be a fixed period of time or indefinite.

What can the duration of a non-disclosure agreement be?

An NDA can be for a fixed period of time or for an indefinite length of time . However, the duration of the agreement should be reasonable for the circumstances and industry in which it is being used if it is to be legally enforceable in court. Different states also have varying standards for how long an NDA may last.

What should be done once the non-disclosure agreement is written?

Once this document has been completed and reviewed, it should be printed out and signed by both parties . The parties should each save a copy of the NDA in their files for future reference and in case of dispute or disagreement.

Which laws are applicable to non-disclosure agreements?

Non-disclosure agreements are subject to the laws of individual states . There is no one federal law covering non-disclosure agreements. In some states, non-disclosure agreements will be interpreted under laws applying specifically to these types of documents. In other states, non-disclosure agreements will be interpreted according to the general rules of contract law.

There is, however, the Uniform Trade Secrets Act , which is a model act that has been adopted by the majority of the U.S. States and the District of Columbia.

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Guides to help you

• What's the Difference Between a Non-Compete Agreement and a Non-Disclosure Agreement?
• How to Protect your Business Secrets
• A Complete Guide to Non-Disclosure Agreements
• Building Better Businesses: an Exploration of the Joint Venture

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4 things you should know about non-disclosure agreements

Non-disclosure agreements (NDAs) are legally binding agreements to keep information confidential. They go by other names in certain contexts, including confidentiality agreements (CAs), confidential disclosure agreements (CDAs), and proprietary information agreements (PIAs). No matter what they are called, the basic underpinning is the same: parties who have signed an agreement cannot discuss any information the agreement covers with a non-authorized party.

There are two main types:

• Unilateral NDA. Only one party has confidential information to protect — the disclosing party — and only one party agrees to keep it confidential — the receiving party.
• Mutual or bilateral NDA. Both or all parties have confidential information, and both agree to keep it confidential.

Companies use NDAs in many situations and to protect many types of information. Take, for example, the mergers and acquisitions process. When a company wants to be acquired, it is common to ask an interested buyer to sign an agreement so that confidential information can be freely shared during negotiations. Each side knowing it is safe helps the business relationship flourish.

With increasing frequency, NDAs are used when a worker has access to confidential information, like business plans, customer lists, marketing strategies, plans for a new product, pricing plans, proprietary processes, trade secrets, or other information that gives the company a competitive advantage — an advantage that would vanish if the information was disclosed. Because employers do not want workers to distribute this information or start a competing business of their own, they often have workers sign non-disclosure agreements to keep such information within the organization.

However, there is starting to be some skepticism in certain quarters toward what some see as the overuse of NDAs. For example, they prevented many people who settled #MeToo claims from discussing their situations, which some argue suppressed necessary information that could bring impermissible behavior to light. This situation has led to stricter scrutiny of non-disclosure agreements, making it all the more critical that they are drafted with great specificity and used judiciously.

The following are four things every organization ought to know.

1. An NDA is a legal document that protects your business information and trade secrets from vendors, employees, and third parties

Non-disclosure agreements help employers by protecting valuable, sensitive business information. Workers may need access to such information to do their jobs, and NDAs make it clear that they can use such information for work purposes but cannot share it outside the organization. Thus, the company has a reasonable level of assurance that work can be accomplished and sensitive information will remain closely guarded.

Beyond that, non-disclosure agreements give employers the following benefits:

• Provide clear expectations of workers. A good agreement clearly delineates which information is protected — for example, whether there are any exclusions — and explicitly spells out the consequences of breaking the NDA. A well-written document will leave a worker with little doubt as to which information is proprietary and must be handled in confidence — and what would happen if that did not occur.
• Help protect trade secrets. An organization may need to disclose some or all of a trade secret with third parties, like vendors, with whom they do business. If the third parties sign NDAs, the trade secret will still enjoy legal protection.
• Grant an employer additional legal recourse. If a worker who has signed an NDA discloses a trade secret, the business may have additional remedies beyond that agreement. In other words, it is not limited to the standard recourse of filing a state-law misappropriation claim. In most cases, a breach of NDA claim is also simpler to pursue than, say, a trade secret misappropriation claim.

2. NDAs are enforceable when they are signed — if they are properly drafted and executed

NDAs are enforceable once signed, provided they have been drafted and executed properly. Unilateral NDAs need only the signature of the receiving party, whereas mutual non-disclosure agreements need the signatures of both parties. There are some differences from state to state, but on the whole, this holds true for most jurisdictions.

The NDA must be supported by consideration, a legal term meaning there was a “ bargain for exchange ” between the parties — something was bargained for and received from the promisor to the promisee. To apply this to the case of an employment NDA, the organization gets its confidential information protected, and the worker, arguably, gets a job. In other words, at-will employment may be sufficient consideration to make agreements enforceable.

An NDA could be unenforceable if it is too broad, is not for a defined time period, covers information that is not confidential, or asks for illegal conduct. There are a great many circumstances that could nullify an agreement, but these are the circumstances that are an immediate red flag in most jurisdictions:

• Overly broad language. If an employer writes an NDA that is too broad or too restrictive, a court is more likely to view it with skepticism. That is especially true if the agreement is not limited in duration or scope.
• Not confidential information. If an organization has already disclosed the information covered by the non-disclosure agreement, then a court might say the agreement is moot. After all, what’s the point of trying to keep public knowledge a secret? An important thing to note is that disclosure does not necessarily have to be intentional. Disclosure through lax behavior counts, too.
• Request for something illegal. An NDA agreement that asks the worker to keep mum on an issue they are legally obligated to report would not withstand scrutiny.
• Consideration is not clear. In the previous section, we noted the common concept of consideration in an employment agreement. Not every judge accepts that so willingly, however. If it is unclear whether there was consideration or that power between the parties was grossly imbalanced, the agreement may be at risk.

3. Legal recourse is possible for a violated NDA

Non-disclosure agreements are a legal contract. If broken, the aggrieved party can take legal action; they should spell out what will happen if breached. Commonly, claims stemming from broken NDAs include:

• Breach of the contract
• Breach of fiduciary duty
• Misappropriation of trade secrets
• Copyright infringement
• Other intellectual property law violations

Imagine a worker or former worker breaks an NDA. If the business learns of this, it may seek an injunction to prevent the employee from further disclosure. The business may also file a lawsuit seeking financial damages for all losses related to the breach of confidentiality obligations.

Once again, state laws may differ somewhat in handling breach of a non-disclosure agreement.

4. Language and word choice in NDAs are of the utmost importance

Precise language is of the utmost importance in non-disclosure agreements. A well-drafted document defines obligations, safeguards sensitive information, and promotes clarity. Ambiguities or loopholes can lead to messy legal disputes or breaches of confidentiality. Clear language helps the signatories understand their rights and responsibilities and fosters compliance.

Done correctly, NDA agreements are legally binding contracts between two or more parties. Depending on the situation, NDAs differ by state and jurisdiction, making it tricky for organizations to ensure they have the utmost legal protection they need.

Not sure which is the right template for your confidential information? Do your organization’s NDAs protect you from potential lawsuits in the future? Start a free trial of Practical Law to access expert-written NDA samples and checklists to quickly execute confidentiality agreements and safeguard your company’s closely guarded information.

Related insights

The basics of non-compete agreements

The basics of the at-will employment doctrine

Still Drafting NDAs the Old-Fashioned Way?

Access a collection of NDA-related resources, including sample agreements, how-to guides and checklists created by 280+ expert attorney-editors

Non-Disclosure Agreements: 10 Key Provisions You Need to Know

NDAs are vital for safeguarding sensitive data in business transactions. They define exceptions to confidential information, specify permitted disclosures, and address legal obligations. Despite their complexity, NDAs foster trust and integrity, crucial for mergers, acquisitions, and partnerships. Precision in drafting is essential to ensure enforceability and protect parties' interests.

Key Takeaways 

• Non-disclosure agreements are vital for protecting sensitive data in business transactions and fostering trust and transparency among parties.
• Essential elements such as identifying parties, defining confidential information, and specifying exceptions ensure clarity and legal compliance. NDAs include provisions for legal disclosures, remedies for breaches, and delineate the duration of confidentiality obligations.
• Careful selection of governing law and jurisdiction, along with implementing restrictive covenants, help maintain integrity and enforceability of NDAs.

At first glance, reviewing a non-disclosure agreement (NDA), often also referred to as a confidentiality agreement, may seem daunting. However, upon close examination, you’ll see that it encompasses a number of provisions that all ultimately work together to protect the disclosure of proprietary or confidential information between 2 or more parties.

In this article, we simplify the NDA and break it down into its most fundamental parts. We also outline the top 10 key provisions that help make up a standard NDA’s foundation.

Why use a Non-Disclosure Agreement in the first place?

NDAs have become a staple in business transactions. This is especially true for joint ventures , mergers and acquisitions , and other partnerships. They allow parties to share confidential information without fear of it being disclosed or misused, as an NDA is designed to safeguard sensitive data. This can encompass a wide array of information including, but not limited to:

• Trade secrets;
• Innovative business strategies; and
• Valuable client contact lists.

NDAs establish clear-cut expectations for all parties involved. They define what constitutes confidential information, outline the receiving party’s responsibilities, and set rules around how this sensitive data should be handled. This prevents inadvertent leaks and builds a culture of trust and transparency within an organization or between business partners.

NDA Provisions You Need to Know

Creating an effective NDA involves careful deliberation. It requires defining the scope of confidential information, specifying its purpose, identifying the parties involved, and including other necessary provisions. With this in mind, here are 10 key provisions you should know when drafting an NDA.

1. Properly Identifying the Parties

In any contract or legally binding document, it’s important to identify the interested parties participating in the transaction clearly. More than that, it’s important to identify those parties’ roles in the negotiation. Therefore, at the outset of any transaction, it must be clear who the parties involved are and who’s committing to the clauses in that document.

The same holds true for NDAs, as they’re legally binding documents. It’s, therefore, important to identify the parties agreeing to the confidentiality obligation contained therein. That said, the first step is to identify what type of NDA the parties consider appropriate for that business deal:

• A unilateral non-disclosure agreement : For this type of NDA, only one party will receive confidential information and comply with the rules of the NDA (the “Receiving Party”). On the other side, the party will share its data and dictate the rules (the “Disclosing Party”).
• A bilateral or mutual non-disclosure agreement : Here, both parties share confidential information with each other, making them both Receiving Parties and Disclosing Parties depending on who’s sharing and who’s receiving confidential information.

After this, each party must be properly identified with their respective full names, addresses, corporate type, jurisdiction, etc. In some cases, the Disclosing Party will not reveal its identity until a confidentiality agreement is signed. This happens for a variety of reasons and is widely accepted. However, as a safeguard, the Receiving Party may include a clause where, after disclosure of the identity of the Disclosing Party, the Receiving Party has a reasonable amount of time to opt out of receiving any confidential information.

2. Definition of Confidential Information

It’s important to determine what type of information is considered confidential and, consequently, what information is protected by the NDA.

Usually, confidential information is broadly defined so that the protections in the NDA cover all of the non-public information disclosed by the Disclosing Party. Still, the parties may narrow the definition of confidential information only to include information that’s specifically marked as such by the Disclosing Party. However, this narrow concept is uncommon since separating information into confidential and non-confidential is time-consuming when information needs to be shared instantaneously.

That said, the definition of confidential information is generally related to the information connected to a particular transaction as discussed between the interested parties, whether oral or written, provided by or on behalf of the Disclosing Party to the Receiving Party, even if it’s not identified as confidential. It’s also important to highlight that, in many cases, documents containing the Receiving Party’s internal analyses, summaries or any other document based on or derived from confidential information (the so-called “Derivative Materials”) may also be considered confidential information.

Trade secrets may also be included in the definition of Confidential Information. In general, trade secrets consist of:

• Business methods;
• Data compilation;
• Organization methods;
• Business model, etc.,

By virtue of not being public, these trade secrets have a special value to that business.  And because of its sensitive nature, Disclosing Parties usually opt out of sharing trade secrets with Receiving Parties. However, suppose that the information is essential to the evaluation of the potential transaction. In that case, the Parties may choose to add additional clauses to the confidentiality agreements. These clauses would require special protection for trade secrets, and their improper disclosure may bring irreparable consequences to the Disclosing Party.

It’s imperative to emphasize the importance of protecting transaction information. The fact that the parties are discussing an agreement or deal, the transaction value, and the terms therein cannot be widely disclosed by either party and deserve special attention and protection within an NDA. As Christopher S. Harrison points out in his book, Make the Deal: Negotiating Mergers & Acquisitions ,

“information about the transaction does not necessarily fall within the concept and protection of confidential information, since it is not necessarily provided from one party to another”.

Therefore, NDAs usually set aside a section dedicated to this subject, with mutual protections for both parties.

3. Carveouts to Confidential Information

Because confidential information is typically broadly defined, NDAs must specify what information will not be considered confidential and, therefore, be excluded from the obligations in the NDA. In most NDAs, the following are considered exceptions to the definition of confidential information:

Information generally available to the public. Crucially, this exception does not apply where the Receiving Party purposely leaks such information to the public. Information already in the Receiving Party’s possession or available to the Receiving Party. If the Receiving Party already knew the information prior to signing the NDA, such information should not be considered confidential information. Information received from a proper third party. It’s important to emphasize that the information from the third party must be received legitimately. Quoting again from Harrison’s book, “in these cases, if the party knew that the information was provided in breach of a Confidentiality Agreement, then the Receiving Party will not have the benefit of this exception”. Information independently developed by the Receiving Party. Information developed by the Receiving Party without relying on confidential information.

4. Representatives

Generally, NDAs prohibit Receiving Parties from disclosing confidential information to any third party. However, a Disclosing Party may agree to share its Confidential Information with the Receiving Party’s Representatives to allow for the thorough evaluation of the potential transaction. The Receiving Party’s Representatives typically include its affiliates, directors, employees, officers, and advisors.

Of course, Receiving Parties, to complete their due diligence, will often request a more expansive definition of Representatives that includes attorneys, consultants, financing sources (equity and/or debt), partners, investors, and even portfolio companies. However, Disclosing Parties, sensitive about the breadth of exposure, may push back on the expansion. They may request prior written consent before disclosing Confidential Information to certain Representatives.

Nevertheless, it’s important to note that Confidential Information may only be shared with the aforementioned Representatives within certain limitations. Disclosing Parties generally require that all Representatives: (a) have a need to know the information and (b) are, at the very least, informed of the confidential nature of the confidential information.

Furthermore, some Disclosing Parties go so far as to request that the Receiving Party’s Representatives be bound by the terms of the agreement (via joinder, etc.) or be subject to confidential obligations similar to those outlined in the NDA.

In some circumstances, the Disclosing Party may request that the Receiving Party be held legally responsible for any breach by any Representatives who actually received any of the Confidential Information. Or, they may ask to treat a Representative’s breach the same as a breach by the Receiving Party. In these instances, an exception may exist for certain professionals who have an implied duty of confidentiality in connection with their employment agreements or professions, for example, attorneys. However, if the Receiving Party would like to avoid liability when it comes to the actions of its Representatives, the Receiving Party may request that the Representative in question sign a separate agreement with the Disclosing Party.

5. Legally Required Disclosures

NDAs typically include a provision that allows Receiving Parties to disclose Confidential Information as required by law; requested or required by order of a court or other legal process; or as is necessary to establish the rights or defense of parties during a dispute.

However, some Disclosing Parties will only allow for “required” legal disclosures and not disclosures that are “requested”. Additionally, most Disclosing Parties will seek, to the extent legally permissible, prior written notice for such disclosures by the Receiving Party. Generally, the Receiving Party, in connection with this disclosure, must: (a) request the confidential treatment of the Confidential Information and/or; (b) cooperate with the Disclosing Party in obtaining a protective order.

Moreover, if the Disclosing Party (again, where legally permissible) requires a legal opinion or advice regarding the disclosure before it happens, it’s necessary to establish which party should bear the cost of protecting the confidential information. Typically, the Disclosing Party will bear this cost, but it’s not uncommon for the agreement to stay silent on the issue.

6. Return/Destruction of Confidential Information

Disclosing Parties are often particularly concerned with the future of the confidential information in the Receiving Party’s possession at the end of negotiations. To resolve those justifiable concerns, NDAs typically include a provision detailing how that disclosed information would be handled at the termination of the negotiation or after a certain agreed-upon period of time (that usually correlates with the term of the NDA). This provision will outline whether the Disclosing Party wants the information to be returned or destroyed.

In many cases, mastering NDA compliance requires effective contract management practices. The Disclosing Party may request that the Confidential Information, depending on its form, be automatically returned upon the expiration of the NDA. However, the Disclosing Party (and sometimes the Receiving Party) may instead request that the information be destroyed for a multitude of reasons.  A request for the destruction of Confidential Information is usually accompanied by a request that the destruction of the information be confirmed in writing or “certified” by an authorized agent. The Receiving Party will commonly respond to a return or destruction request with language that protects any legal retention requirements to ensure that the Receiving Party remains compliant with applicable legal, compliance or statutory regulations. The duration of confidentiality obligations for legally retained information varies, but it’s typically outlined in each agreement.

7. Remedies for Breach

NDAs usually include language about possible consequences for unauthorized disclosure or a breach of the NDA by a Receiving Party. This covers remedies available to the Disclosing Party in the event of actual or threatened breaches. Typically, the most common remedies available to Disclosing Parties for the breach of an NDA are the equitable reliefs of injunction and specific performance. For example, the Disclosing Party can ask the court:

to compel the Receiving Party to stop sharing its confidential information with unauthorized persons; to delete transaction information from the Receiving Party’s website; and where the NDA contains a non-solicit; and to terminate the employment of persons covered by the non-solicit.

In addition to equitable reliefs, some NDAs require the Receiving Party to indemnify the Disclosing Party through compensation for any harm or loss it suffers due to a breach of the NDA. Most Receiving Parties reject indemnification clauses in favor of having the non-prevailing party reimburse the prevailing party for its reasonable and documented legal costs and expenses in case of litigation to enforce the NDA.

8. Term of the NDA

Usually, confidentiality agreements are temporary documents and have a pre-established duration (usually ranging from 2 to 5 years after the signing date). Once this period has expired, the obligations in the NDA are no longer valid, and the Receiving Parties are authorized to disclose information about that transaction. Sometimes, the Disclosing Party sharing the information does not set a specific time limit. Instead, they ask that the rules in the NDA be followed as long as the shared information is still considered “confidential”.

However, in some cases and with respect to certain types of information, the confidentiality obligations under the NDA may extend beyond the period determined for the other confidential information. For example, if a confidentiality agreement foresees the possibility of sharing trade secrets, which are considered by their nature to be more sensitive information (as explained in topic 2), it may be required that such information continue to be kept confidential even after the expiration of the term established for that NDA.

9. Governing Law and Jurisdiction

The choice of jurisdiction and governing law is extremely important in a confidentiality agreement. Although in most NDAs, both concepts are concentrated in the same paragraph, they’re different. Jurisdiction refers to the choice of the place (state or country) in which a possible lawsuit may be filed regarding conflicts related to that NDA, while governing law is the law that will be applicable in the event of litigation regarding that NDA. It’s also important to mention that although most confidentiality agreements choose the same jurisdiction and governing law, this is not a rule and can be different.

As mentioned, the choice of governing law and jurisdiction needs to be made carefully by the parties. This is because, in case of any conflict between them, the law and the place of its application will impact the possible resolution of disputes. Depending on the country and even the state of jurisdiction, the law and its application are completely different and may substantially favor or harm the parties. Therefore, this choice must be made intelligently and carefully so that the interests of both parties are duly protected.

10. Restrictive Covenants

Restrictive covenants in NDAs typically seek to restrict, limit, or prevent the Receiving Party from doing certain things, such as soliciting employees of the Disclosing Party or contacting customers, suppliers, employees, or officers of the Disclosing Party regarding the transaction.

Employee non-solicitation clauses are the most common restrictive covenants in NDAs. These clauses typically prevent the Receiving Party from soliciting or hiring all or certain employees of the Disclosing Party for a certain period. This is because the loss of certain key employees may negatively affect the value of the Disclosing Party and jeopardize the transaction. While the Disclosing Party will usually want this clause to be as broad as possible, the Receiving Party will try to limit its scope with carveouts that allow soliciting and hiring through general non-targeted advertisements, independent approaches by the covered employees, and following the termination of such person’s employment.

Some NDAs also contain no-contact clauses restricting the Receiving Party from contacting certain parties regarding the transaction and the disclosed confidential information. Other restrictive covenants include non-competes, non-disparagement and non-interference with the Disclosing Party’s business/relationships; however, the Receiving Party usually rejects these as they’re considered inappropriate in NDAs.

Final Thoughts

The complexities of NDAs might appear intimidating at first glance. However, as this article has highlighted, these agreements are instrumental in preserving confidential data in business transactions. They meticulously define the parties and lay out key provisions, making it a task that requires careful thought and precision.

In a business world where mergers, acquisitions, joint ventures, and other forms of partnerships are commonplace, NDAs are invaluable assets. They create a secure environment for exchanging sensitive information, which can range from proprietary trade secrets to inventive business tactics and prized client contact lists. By setting clear expectations, these agreements deter accidental leaks and cultivate an atmosphere of trust and openness between involved parties.

However, NDAs can also include other provisions, for example, standstills, non-circumvention clauses, financing lockups, etc., depending on the type of transaction being contemplated. Additionally, it’s important to note that where a company with publicly traded securities is involved in the transaction, language specifically protecting that company’s material non-public information (a company’s non-public information that can affect its share price) is also included in the NDA.

If you still have any questions about a new or existing NDA, reach out or download our Legal Outsourcing Brochure to learn more about our unique approach to contracts management.

Frequently Asked Questions

When do you need an nda.

NDAs are vital in business scenarios where sensitive information is shared. You may need an NDA when hiring employees, licensing a product, negotiating with partners or investors, or during mergers and acquisitions. NDAs secure confidential data, protect intellectual property, and foster trust, ensuring business integrity and competitiveness.

How Long Does an NDA Last?

An NDA is typically defined within the terms of the contract. Often, NDAs offer protection for a time-limited period, usually between 1 to 5 years. However, some NDAs may extend indefinitely, such as in the case of trade secrets, though they generally specify when the information ceases to be confidential. The exact length depends on the nature of the information and the agreement between the parties involved.

What Makes an NDA Unenforceable?

An NDA may be deemed unenforceable if it contains overly broad or vague language, fails to define what constitutes confidential information, lacks consideration, or violates legal requirements. Moreover, it’s unenforceable if the NDA demands the signee to engage in illegal activities. Therefore, precision in language and adherence to legal parameters are critical when drafting an NDA.

What Happens If You Break an NDA?

Breaching an NDA can have severe repercussions, including legal and financial penalties, reputational damage, and possible termination of employment or contracts. Legal proceedings may be initiated to enforce the NDA and seek compensation for losses. Moreover, the breach can tarnish one’s reputation, impacting trust and future business prospects. In extreme cases involving sensitive or classified material, criminal charges might be applicable.

• Marina Costa
• Gianina Jean-Baptiste

Disclaimer: This article is made available by Sterlington for informational purposes only. It is not intended to provide specific legal advice and should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Using this website does not establish any attorney-client relationship between Sterlington and yourself.

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• Non-disclosure (NDA)

10 Key Clauses to Have in Non-Disclosure Agreements

Non-disclosure agreements (NDAs) have become so commonplace in business transactions that they almost seem generic and clichéd, causing many business professionals to neglect their true significance.

To make matters worse, of those who want to use one, few understand how to do so correctly so the drafted agreement often ends up being weak and ineffective , if not worthless and outright void .

Despite its bad reputation, however, an NDA is a crucial legal document, essential to the protection of any legitimate company or business owner. In fact, neglecting to implement this kind of well-written legal agreement can cause your business considerable harm.

In an effort to bring some love back to this overlooked and habitually misused agreement, we’ve taken the liberty of highlighting its importance here and revealing the 10 key clauses needed to make your non-disclosure agreement worth more than just the paper it’s written on.

The importance of signing non-disclosure agreements

First, to address the growing notion that NDAs are irrelevant, I say to you this: ideas are the foundation of all trade, are they not?

Without an idea , you have no industry. Without an industry, you have no business. In fact, for most companies, their net worth is entirely wrapped up in their patents, trademarks, designs, systems, processes, trade secrets and clientele base. Money follows unique ideas and their results.

Second, I address the sad fact that NDAs, when used, are far too often done so incorrectly .

Remember, an NDA is simply an agreement wherein two or more parties agree to keep certain privileged information confidential or secret. This kind of legal agreement can be a mutual or one-way agreement, but always the main goal is to protect information or trade secrets that are critical to a company’s success.

In order for this kind of legal agreement to effectively protect your confidential information, however, it has to be a well-written, legitimate and compelling agreement. In other words, if it won’t stand up in court, then what’s the point?

On that note, let’s go over the 10 key clauses you should have in every non-disclosure agreement.

Clause #1: Definition of Confidential Information

Without a doubt, the most critical component of a non-disclosure is the definition of the confidential information.

This clause clearly spells out what information is not to be disclosed. This is the whole point of the agreement right here.

Here’s an example of this kind of clause from Sonnyboo Non-Disclosure Agreement where it basically states that all information disclosed by the writer to the producer is confidential:

And as simple as it sounds, far too many agreements have ambiguous definitions which don’t hold up so well in court.

Included in this type of clause should be specifications about what constitutes “ privileged ” information, as well as an explanation of which formats are covered.

In other words, cover all your bases and specify that information shared through documents, emails, oral conversations, hand-written notes, letters, etc. is all included.

If you’re the Disclosing Party in the agreement, you want to cast a wide net, but not leave any holes.

Clause #2: The Parties

Besides the obvious need to define the Disclosing and the Recipient parties, a non-disclosure should also contain a clause that specifies who else the Recipient Party may disclose the confidential information to during the course of due diligence and business discussions.

For example, the Recipient Party may have their own accountants and attorneys who may need to review the information.

Or, they may contract a third-party to perform some work, such as a graphic designer, editor, developer, etc. These third-party recipients of your confidential information are critical to the performance of this legal contract and should be included in the non-disclosure.

Clause #3: The Terms and Duration

Every non-disclosure agreement should have a clearly defined timeframe .

When does the agreement end and for how long does the confidential information need to stay confidential?

There’s no standard time-limit for these agreements, as each situation is unique. Some trade secrets may be just as crucial 10 years from now as they are today, so specify that in the agreement.

Other details, however, may be irrelevant in 18 months and the agreement should reflect that as well.

Under this type of clause, it’s important to keep in mind that most jurisdictions won’t enforce unrealistic time limits on any legal agreement, including non-disclosures.

While you want to protect your business and the information you’re about to disclose, you also have to be practical and fair to the receiving party.

Clause #4: The Permitted Use of the Information

This clause is where you need to clearly define the intended use of the shared, confidential information.

In other words, why are you sharing this information with the Recipient Party in the first place? Be specific. Sometimes this clause is also used to define third parties, but we prefer to keep those separate for clarity’s sake.

For example, a standard non-disclosure agreement often includes this type of clause like this:

Clause #5: The Legal Obligation to Disclose

Even the most careful and reliable of Recipients to confidential information may, at some point, be legally compelled to disclose the information they agreed to keep confidential under this type of agreement.

This may come from a government agency, administrative entity or via the courts.

To protect both parties – the Disclosing and the Recipient – in these kind of instances, your non-disclosure should include a clause acknowledging that a legal obligation to disclose is not a violation of the agreement.

However, as the Disclosing Party (the party that discloses the information to another party), you also want to include verbiage stating that the Recipient Party (the party that receives the information), if compelled to disclose, will only disclose the information that’s absolutely necessary and that they’ll notify you if such a demand occurs.

Clause #6: The Return of the Information

At the end of the agreement, the confidential information typically needs to be returned or destroyed by the Recipient Party.

Your non-disclosure should contain a clause stipulating exactly how and when this should occur. This can largely depends on the circumstances of your relationship.

Due to the advent of hard drives, drop boxes, thumb drives, email storage, etc. it’s nearly impossible to completely destroy or return every bit of information that’s shared electronically.

But this type of clause would inform the Recipient Party that all received information must be returned or deleted. If the information is difficult to erase, the clause can include verbiage to prevent the Recipient Party from using the information in the normal course of business or sharing it in the future.

Clause #7: The Jurisdiction

Even the most diligent and thorough of contracts can’t prevent every possible conflict between business parties. Breaches occur and misunderstandings happen.

You want to be prepared for this unfortunate event by including a clause in your non-disclosure that specifies which court has jurisdiction over any resulting legal action.

Believe it or not, arguments about jurisdiction can become just as big as whatever disagreement started the legal action in the first place. Avoid this non-sense by affirming jurisdiction in the agreement.

Clause #8: The Remedies

Along the same lines as the Jurisdiction clause explained above, your agreement should also include a clause that specifies the acceptable remedies in the case of a breach from the Recipient Party’s part.

The costs of a breach can be hard to calculate or prove, so a mutual agreement up front as to what constitutes a fair remedy will help you avoid a lengthy legal battle later on.

This clause should include the possible consequences of a breach and explicitly preserve your right as the Disclosing Party to seek equitable remedies.

Remember that this clause should be a mutually agreeable one so be careful to avoid being too specific, excessive in your remedy requirements or one-sided when it comes to possible resolutions. If it’s too biased, the Recipient Party may be hesitant to sign the agreement as well.

Clause #9: Responsibility over Legal Fees

Many in the legal world frown upon clauses that specifically award attorney’s fees or punitive damages to the Disclosing Party, should they prevail in case of a breach of contract.

The argument is that such a clause renders this kind of legal agreement partial to the Disclosing Party and gives them too much incentive to file suit, even for the most trivial of matters.

With that in mind, it’s best to have a mutually agreeable clause that clearly defines who will be responsible for legal fees should a suit be filed. Even if that means clarifying that each party will be responsible for their own fees , regardless of the outcome. The point is to have that discussion up front and make sure everybody is on the same page.

Clause #10: The No Binding

Last, but certainly not least, no non-disclosure should be complete without a non-binding clause .

Because these agreements are often initiated prior to negotiations for a merger, partnership, temporary project, or other similar collaboration, it’s important to include a non-binding clause which allows both parties to terminate the relationship at any point.

In other words, the signing of a non-disclosure agreement generally doesn’t signify a permanent relationship and you should preserve your right to withdraw from the relationship at any point you see fit, provided you abide by any relevant laws or contractual stipulations (the terms in your agreement) when doing so.

Here’s what a standard “ No Obligation ” clause will look like:

At the end of the day, when non-disclosure agreements are used properly, they protect confidential information, keep trade secrets, and preserve the unique aspects that make your business work.

A well-written NDA will cast a broad net for the Disclosing Party and close any potential loopholes while still retaining a respectable level of fairness and value for the Recipient Party.

Credits: Icon Bulleted List by Travis Avery from the Noun Project.

Nov 16, 2017 | Non-disclosure Agreements

This article is not a substitute for professional legal advice. This article does not create an attorney-client relationship, nor is it a solicitation to offer legal advice.

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Non-Disclosure Agreement (NDA) Template

Use our Non-Disclosure Agreement to protect your confidential information. Begin by selecting the relationship between the parties.

• 4.7 1,111 Ratings

Updated October 27, 2023 Written by Josh Sainsbury | Reviewed by Brooke Davis

A Non-Disclosure Agreement (NDA) , also known as a confidentiality agreement, is a contract between two parties where one shares sensitive information and the other party promises to keep it confidential. Confidential information is often sensitive, technical, commercial, or valuable in nature (e.g., trade secrets or proprietary information).

Both parties sign the Confidentiality Agreement, creating a binding contract to keep the information secret. Be sure you understand how to write an NDA before drafting your own.

Non-Disclosure Agreement – By State

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Basic/Standard Confidentiality Agreement

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What Is the Purpose of a Non-Disclosure Agreement?

How to write a non-disclosure agreement, sample non-disclosure agreement, frequently asked questions.

A Non-Disclosure Agreement aims to prevent confidential information from being publicly disclosed or used by any parties you share information with.

A signed NDA sets the legal framework to protect intellectual property and information from being stolen, sold, or shared with third parties, such as business competitors.

An NDA is typically used to:

• To protect sensitive information – If you or your company need to protect sensitive data, you can use an NDA, so participants are legally bound not to divulge or release the information to other parties.
• Protect patent rights – If you intend to share trade secrets, you must take reasonable steps to protect their confidentiality. An NDA is an appropriate step.
• Outline what information is confidential – An NDA classifies exclusive and personal information to avoid confusion .

Examples of situations when a company uses an NDA:

• In-depth business discussions
• Hiring employees, freelancers, or contractors
• Working with potential investors
• Supplementing other agreements

Here is a walkthrough on how to create and fill out an NDA, what are the standard clauses you should include, and what they mean:

Step 1 – Disclosing and Receiving Parties

Start your NDA by establishing the “ Parties ” to the agreement. The “ Disclosing Party ” is the individual or entity sharing information. At the same time, the “ Receiving Party ” is the individual or entity receiving information.

Confidential information has been shared in a mutual NDA (a bilateral NDA). In this agreement, both parties serve as the Disclosing and Receiving Parties.

Here’s an example of how to start an NDA and establish the Parties to the agreement. Notice that the sample NDA clause also specifies what transaction or relationship the NDA relates to:

Step 2 – Confidential Information

After the Parties have been established, specify what the Non-Disclosure Agreement protects confidential information.

Common examples of NDA-protected confidential information include:

Trade secrets

• Special formulas
• Instruments
• Software development
• Technical designs
• Customer lists
• Patent details

Business Ventures

• Affiliate deals
• Partnerships
• Real Estate
• Consultations
• Advertising and marketing
• Pricing structures
• Business and financial records

Creative Endeavors

• Documentary, TV, film, and news production
• Illustrations, graphic design, and drawings
• Inventions, prototypes, or product samples
• Visitor or factory tours
• Bachelor or bachelorette parties
• Volunteering
• Celebrity meet-and-greets
• House tours
• Original artwork

These are only a few examples of the types of information you wish to keep confidential under the protection of your NDA. Your agreement can list as many or as few confidential information as needed. Still, it would help if you were specific about what information the Receiving Party cannot disclose.

Being specific about what your NDA protects information will help it stand up in court in a legal dispute.

Step 3 – Exclusions from Confidential Information

An “ Exclusions ” clause defines what information the NDA does not protect.

Information that a Non-Disclosure Agreement can’t protect includes:

• information already in the public domain
• information the other party already has access to before the NDA
• information that is independently developed or discovered by the recipient
• information that the Disclosing Party has authorized the Receiving Party to share with the prior written consent

Read More: Understanding Confidential Information in NDAs

Oral information can be deemed confidential if confirmed in writing within a specific time frame after being disclosed.

Here’s an example of what your Exclusions clause should look like:

Step 4 – Non-Disclosure Obligations

The bulk of your NDA will comprise Non-Disclosure Obligations , which outline the Receiving Party’s obligations to the Disclosing Party’s information.

Rather than being a single clause, this section will likely comprise multiple clauses that detail various obligations.

This section will start with a clause like in the example below, which states the general obligation of the Receiving Party to keep the confidential information quiet.

Depending on your needs, you can add additional clauses to this section of your NDA. Here are some other provisions you may choose to include in your Non-Disclosure Obligations section:

1. Non-Disclosure of Transaction : the Receiving Party promises not to let others know that:

• The Disclosing Party has shared or used Confidential Information.
• A transaction is being discussed or negotiated.
• A transaction has taken place, including the details of the relationship.

2. Non-Solicitation : either party may prevent the other from soliciting or offering employment to the other party’s employees or diverting business from the other party.

3. Non-compete : Parties agree not to engage in business activities directly competing with the other party. Many companies have partners and employees sign NDAs and non-compete agreements separately.

4. Non-Circumvention : if the Disclosing Party shares business contacts, a non-circumvention clause prevents the Receiving Party from bypassing the agreement and directly doing business or engaging with those contacts.

In the NDA sample below, you can see how these clauses may look in an agreement:

You may include only a few examples of Obligation clauses in your NDA.

Step 5 – Time Frame / Termination

The NDA should explicitly state how long it remains in effect. The Time Frame includes when the promise to keep confidential information secret begins (the “ Effective Date “) and the duration in which the protected information must not be shared with others (the “ Disclosure Period “).

Usually, the Parties agree to when the term of the agreement will end (known as the “ Termination ” provision). For example, the Non-Disclosure Agreement could terminate when:

• The agreement expires
• The transaction is completed, or
• A specific period has passed.

Step 6 – Jurisdiction

The Jurisdiction clause establishes which state’s laws govern the Confidentiality Agreement. Suppose confidential information is leaked or inappropriately used by one party, and a lawsuit ensues. In that case, the laws of the agreed-upon state will apply, and any trials or hearings will occur there.

Ensure you understand state laws when writing a Non-Disclosure Agreement. Some states don’t honor certain kinds of NDA clauses. For example, California doesn’t honor non-compete clauses in most situations. Ensure your NDA template follows state laws, and you’ll avoid problems later.

Step 7 –  Signatures

Finally, your NDA needs to include the signatures of all Parties and their Representatives.

Representatives are other people (i.e., directors, officers, employees, agents, or advisors) who may share, receive, or protect the information in pursuit of the Transaction specified in the NDA.

Here’s an example of the Disclosing Party’s signature section:

Directly below this is the Receiving Party’s signature section, which is identical.

Step 8 – Additional Clauses

Every NDA will look different depending on the nature of the transaction, relationship, and information being specified. There are additional clauses you may choose to include in your Confidentiality Agreement:

• Remedies : stipulates the consequences of breaking the NDA
• No License:  provides that the NDA doesn’t give either party any patent, copyright, or ownership of the information provided.
• Severability : states that if one part of the NDA is ruled invalid in court, that part will be removed, and the rest of the agreement remains valid.
• Amendments : notes that the NDA may be amended at any time.

You don’t need a lawyer to complete an NDA agreement template, but working with an attorney can help. If you have questions about adjusting or adding to your NDA, consulting a lawyer will ensure your agreement is legally sound.

The following confidentiality agreement sample is an excellent example of how you can structure your basic NDA agreement template. You can also check out our other NDA templates for samples.

• What should an NDA include?
• NDA vs. Non Compete
• NDA vs. Confidentiality Agreement

Can I handwrite an NDA?

What should a Non-Disclosure Agreement include?

Your Non-Disclosure Agreement is applicable as long as you agree with the other party/parties involved. Typically, a standard NDA ranges from one to five years; however, depending on the information to be kept confidential, an NDA can be indefinite.

What’s the Difference Between a Non-Compete and a Non-Disclosure Agreement?

The primary difference between a non-compete and a non-disclosure agreement is the business activities they intend to restrict.

• A non-compete agreement prohibits one party from doing business that competes with the other party . For instance, it prevents one party from hiring the other’s employees and business contacts and working with competing companies.
• A non-disclosure agreement prevents one or both parties from using or leaking sensitive information learned in negotiations or business relationships.

These documents get confused because non-disclosure agreements often include a non-compete clause. Businesses bundle the non-compete clause into the non-disclosure agreement because it’s easier to sign one document than two.

What’s the Difference Between a Non-Disclosure Agreement and a Confidentiality Agreement?

There is no difference between a non-disclosure agreement (NDA) and a confidentiality agreement . Non-disclosure and confidentiality agreements protect confidential information from being shared with third parties.

In other words, these documents’ titles come down to preference because they both serve the same legal function. Some other names people use interchangeably with confidentiality and non-disclosure agreements include:

• Secrecy Agreement
• Confidential Disclosure Agreement (CDA)
• Proprietary Information Agreement (PIA)

You may see a non-disclosure or confidentiality clause in other legal documents. For example, most independent contractor agreements outline the terms of a project and include a clause stating that any information shared is confidential.

You should not handwrite an NDA. Handwritten contracts are often dismissed in court because they are messy or incomplete. Always write NDAs digitally and print them out if you need a physical copy.

Related Documents

• Employment Contract : Use this document to hire an employee for your business, and define details like wages and working hours.
• Sales and Purchase Agreement : Outlines the terms and conditions of an item sale.
• Letter of Intent : Use this document to declare your interest in a potential sale.
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What are the different clauses in an NDA?

Non-disclosure agreements, as we talked about in a previous blog post , are important tools for any company that shares confidential information with third parties.

Within a non-disclosure agreement (NDA), there can be different clauses about rights, relief and more. This post is meant to summarize some of the more “legalese” provisions that might appear in an NDA and why they matter.

Can a party assign their rights to a third party?

An assignment clause provides rules for whether a party is allowed to assign their rights or obligations under the NDA to a third party. There are situations where assignment could be helpful or harmful, depending on who is assigning. 

If a receiving party sells its assets to a third party, for example, and assigning its rights under an NDA to the buyer, the buyer may be a company that the disclosing party would not have wanted to share that confidential information. This situation could also arise in a change of control of the receiving party, so it is best practice to be careful whenever there is an assignment or change of control clause within an NDA.

Does choice of law matter?

Yes! There should be a clause within the NDA that chooses the laws of which state (or /province or country if outside the U.S.) will govern the agreement. This clause should probably also choose a proper venue or it may provide that the dispute resolution method will be arbitration instead of litigation. It is important to choose a reasonable jurisdiction to enforce the NDA, as well as one that is not too inconvenient or costly.

What is injunctive relief?

What happens when a receiving party discloses confidential information in violation of an NDA? In this case, the disclosing party can seek an injunction. An injunction is a court order for a party to do (or stop doing) something.

The party seeking the injunction must show that they have suffered or will suffer irreparable harm from the unauthorized use of their confidential information. “Irreparable harm” means the type of harm that cannot be cured through monetary compensation.

The cost of litigating an injunction can be significant, so some NDAs include a provision stipulating that the unauthorized disclosure of confidential information will cause irreparable harm. This does not necessarily mean that the judge will automatically grant an injunction, but it could make proving irreparable harm easier or improve the availability of emergency, short-term action by the court.

Who pays for the legal fees?

Similar to an injunction, the cost of seeking enforcement of an NDA can also be substantial. Therefore, it may be a good idea for the disclosing party to include a fee payment provision. Generally, this type of provision allows the prevailing party to recover its legal fees from the other party.

Without such a provision, a successful party may still suffer financial harm when paying the costs of their own legal fees, and in the face of the huge expense of enforcement, a party might be hesitant to enforce their rights at all.

Whether fees can be recovered in contract cases is a matter of state law, so choice of law is important!

What happens when a party is legally compelled to disclose information?

NDAs should have a provision that specifies what happens if the receiving party is compelled to disclose confidential information by law. For example, if the receiving party receives an order from a court or other governmental agency, or as part of the discovery process. Typically, these provisions require the receiving party to notify the disclosing party that such an order has been issued. Additionally, the receiving party should also be required to cooperate (within reason) with the disclosing party in acquiring a protective order.

A protective order allows the parties to keep confidential information protected from disclosure beyond the ordered disclosure to the court. This clause is important, especially with litigation, because either party can add documents to their court filings. These documents could then become generally accessible by the public, which would defeat the purpose of the NDA!

Strong non-disclosure agreements are essential tools for businesses to protect their commercially valuable information as well as the personal information of clients and employees. However, the strength of the agreement can hinge on the way key provisions are written.

Finding the best fit for each situation may take time, but the protection afforded by a well-drafted NDA is worth the time.

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Non-disclosure agreements (NDAs): Guide for people professionals

Clear and practical advice on the proper use of non-disclosure agreements (NDAs) or confidentiality clauses and how to avoid inappropriate use

Non-disclosure agreements (NDAs) or confidentiality clauses can be used to ensure employees keep matters about their employment confidential. In recent years, the misuse of NDAs has come under scrutiny following revelations about their use to silence victims of sexual harassment. Various measures have been proposed to control the use of NDAs and prevent their abuse, and both Acas and the Equality and Human Rights Commission (EHRC) have published guidance on the topic.

NDAs can be useful for both employers and employees in certain circumstances, but it is vital to ensure that they are used legally and ethically. People professionals have a key role in ensuring that NDAs are not misused.

People professionals need to be aware of the serious potential misuse of NDAs and confidentiality clauses in relation to sexual harassment complaints. NDAs should never be used to cover up inappropriate behaviour and wrongdoing, or to stop claims of whistleblowing or other forms of discrimination.

People professionals have an important role to play in ensuring the ethical use of NDAs. This means influencing the organisation’s leadership, in that NDAs should never be used as a default option in bullying or harassment complaints, or to silence alleged victims. There needs to be oversight at the top of the organisation to ensure that NDAs are not used to push harassment issues under the carpet and avoid tackling unfair treatment.

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Crash Course on Non-Disclosure Agreements (`NDAs')

Non-disclosure agreements are a crucial, but often overlooked, tool in allowing startup companies to grow, build strategic partnerships and explore new business relationships necessary to develop their product or bring it to market. These agreements are often short (sometimes only a page or two) and lead many founders to forego legal advice to get past this "formality" and begin working with the other party to the NDA. Yet, NDAs are important agreements with potentially far-reaching implications for the protection of a company's confidential information and intellectual property, and mishandling of NDAs can come back to haunt a startup years later.

To follow is a short list of some main points to take into consideration; if you are not using a lawyer, consider these points when negotiating an NDA. Keep in mind that there are more points to consider and that these are just a few of the main ones. The list assumes that you are disclosing sensitive information and, accordingly, your focus is on protection of confidential information shared.

1 . Mutual vs. Unilateral ("one sided") - Should the agreement be mutual or unilateral? If only one party is sharing and disclosing confidential information (such party, the discloser) and the other party is only receiving confidential information (such party, the recipient), then a unilateral NDA may be in place. Often people are indifferent, but still do think about this you may want to remain in a clear position of no exposure to information of the other party which may block you in the future. If you agree to adopt a mutual NDA, you should still ask yourself which party in the engagement is expected to be the more heavily disclosing party. A mutual NDA can be drafted in favour of the discloser or in favour of the recipient on some of the key points mentioned below and simply accepting the notion of a mutual NDA (sometimes startups do this to appease the other party) doesn't eliminate the need to consider these points in light of the question of who is expected to be more on the disclosing end.

2. Purpose -  The NDA should set the purpose for which information is shared by the discloser, and the recipient. If drafted correctly, the significance here would be that the recipient will be limited to using the confidential information only for that purpose.

3. Timeframe  - There is a period of time during which information shared is covered by the agreement, and then there is a separate period of time during which information disclosed remains protected by the agreement. Make sure to set a suitable period of time (normally, this would be around 3 to 5 years). You could try and say that the confidentiality undertakings go on forever until information is simply no longer confidential, but often people will not want to sign an indefinite agreement; in such case, you should try and add a statement that after the contractual period of time, information that constitutes a trade secret of the discloser will still continue to enjoy all protections under applicable law.

4. Others  -  Does the agreement allow the recipient to share the discloser's information with others such as affiliates, consultants, advisors, etc.? Consider if agreeable. Will you be fine with the recipient sharing your information with all its affiliates (often loosely defined, for example not limited to relations of 100% holdings, etc.) Will you be fine with the recipient sharing your information with outside-of-the-organisation people such as consultants and advisors, who may also be working with others such as competitors of yours, etc.?

5. Ownership -  The NDA may be a good place to add a statement that you remain the sole owner of all information shared by you, and you can also try and state that you remain the sole owner even in cases where the other party may contribute to the information by provision of feedback, advice, recommendations, etc.

6. "As-is"  - It is good practice to have the NDA state that all information shared by you is provided "as-is", with no representations, warranties, etc. with respect to it. This protects you, for example, against a claim by the recipient that he was damaged by something you shared (e.g. the confidential information infringes on a third party's intellectual property rights).

7. Assignment by Recipient  - Beware of the clause in the agreement allowing assignment of the agreement by the recipient to others, such as in case of an M&A transaction (for example, where the recipient sells its assets and operations to a third party). The buyer of the assets and operations may actually be a company with whom you would actually not agree to share your confidential information. The same is true also in case of a change of control over the recipient, especially if the recipient may share the information with its affiliates (this second scenario is rarely ever dealt with, but the risk is still there).

8. Assignment by Discloser  - On the other hand, you may want to try and allow the discloser to assign its rights as a discloser to any buyer of discloser, so that the buyer buys the assets and operations together with the full suite of protection that the discloser has.

9. Limited Liability, etc.  - Most commercial agreements contain provisions according to which the parties' liability is limited in various manners. Not all such limitations are in place in an NDA. For example, in case of misuse of discloser's confidential information, discloser would expect compensation for indirect damages. So, limitation of liability provisions needs to be carefully reviewed.

10. Governing Law and Jurisdiction  - The agreement will state the laws of which country (jurisdiction) will govern the agreement, and also in which country will the parties litigate in case of a dispute or conflict (venue). There are various considerations here, so just in a nut shell pick a jurisdiction that is favourable to you, where it would be easy for you to conduct a legal proceeding and to enforce it, if needed.

***************

Remember, the NDA is usually sufficient only to govern the exchange of confidential information from one party to another and the treatment of this information. At times, startups believe that once an NDA is signed they are protected enough to commence a commercial engagement. For example, startups at times sign a potential employee or service provider on an NDA and then begin working together (with their commercial understandings agreed orally or in an email). In reality, this could mean that other important legal points, such as the agreement on whether or not intellectual property produced or created in the relationship is assigned to one party or another, have been overlooked. The NDA should either strive to cover these points (it is not unusual to have an NDA include an "assignment of inventions" clause if it is signed with an employee, service provider or consultant) or should serve the parties only for the purpose of evaluating and negotiating their future engagement, whereas an agreement on the other key and commercial legal points should be added to it.

The online link to the article can be found here .

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This unilateral nondisclosure agreement is between , an individual a(n) (the " Disclosing Party ") and , an individual a(n) (the " Receiving Party ").

The Disclosing Party has developed certain confidential information that it wants to make available to the Receiving Party for the purpose of .

The Receiving Party wants to review, examine, inspect, or obtain the confidential information only for the above-described purposes, and to otherwise maintain the confidentiality of that information pursuant to this agreement.

The parties therefore agree as follows:

1. CONFIDENTIAL INFORMATION.

The Disclosing Party may (but is not required to) disclose certain of its confidential and proprietary information to the Receiving Party. " Confidential Information " means:

• (i) provided or shown to the Receiving Party or its directors, officers, employees, agents, and representatives (each a " Receiving Party Representative ") by or on behalf of the Disclosing Party or any of its directors, officers, employees, agents, and representatives (each a " Disclosing Party Representative "); or
• (ii) obtained by the Receiving Party or a Receiving Party Representative from review of documents or property of, or communications with, the Disclosing Party or a Disclosing Party Representative; and
• (b) all notes, analyses, compilations, studies, summaries, and other material, whether provided orally, in writing, or by any other media, that contain or are based on all or part of the information described in subsection (a) (the " Derivative Materials ").

The Disclosing Party shall identify Confidential Information disclosed orally as confidential within    days of disclosure. The Disclosing Party's failure to identify information as Confidential Information is not an acknowledgment or admission by the Disclosing Party that that information is not confidential, and is not a waiver by the Disclosing Party of any of its rights with respect to that information.

2. OBLIGATION TO MAINTAIN CONFIDENTIALITY .

• A. a Receiving Party Representative who needs to know the Confidential Information for the purposes
• of its business with the Disclosing Party;
• B. with the Disclosing Party's prior written authorization; or
• (ii) use the Confidential Information for any purposes other than those contemplated by this agreement.
• (b) No Reverse Engineering. The Receiving Party may not reverse engineer, disassemble, or decompile any prototypes, software, or other tangible objects that embody the Confidential Information and that are provided to the Receiving Party under this agreement.
• (c) Term. The Receiving Party shall, and shall require each Receiving Party Representative to, maintain the confidentiality and security of the Confidential Information until the earlier of: (i) such time as all Confidential Information disclosed under this agreement becomes publicly known and is made generally available through no action or inaction of the Receiving Party or (ii) the third anniversary of the disclosure. However, to the extent that the Disclosing Party has disclosed information to the Receiving Party that constitutes a trade secret under law, the Receiving Party shall protect that trade secret for as long as the information qualifies as a trade secret.

3. EXCLUSIONS.

The obligations and restrictions of this agreement do not apply to that part of the Confidential Information that:

• (a) was or becomes publicly available other than as a result of a disclosure by the Receiving Party in violation of this agreement;
• (i) the source of such information is not bound by a confidentiality agreement with the Disclosing Party or is not otherwise prohibited from transmitting the information to the Receiving Party or a Receiving Party Representative by a contractual, legal, fiduciary, or other obligation; and
• (ii) the Receiving Party provides the Disclosing Party with written notice of such prior possession either (A) before the execution and delivery of this agreement or (B) if the Receiving Party later becomes aware (through disclosure to the Receiving Party) of any aspect of the Confidential Information as to which the Receiving Party had prior possession, promptly on the Receiving Party so becoming aware; or
• (i) provide the Disclosing Party with prompt notice of any such request or requirement before disclosure so that the Disclosing Party may seek an appropriate protective order or other appropriate remedy; and
• (ii) provide reasonable assistance to the Disclosing Party in obtaining any such protective order.
• If a protective order or other remedy is not obtained or the Disclosing Party grants a waiver under this agreement, then the Receiving Party may furnish that portion (and only that portion) of the Confidential Information that, in the written opinion of counsel reasonably acceptable to the Disclosing Party, the Receiving Party is legally compelled or otherwise required to disclose. The Receiving Party shall make reasonable efforts to obtain reliable assurance that confidential treatment will be accorded any part of the Confidential Information so disclosed; or
• (d) was developed by the Receiving Party independently without breach of this agreement.

4. RETURN OF PROPERTY .

If the Disclosing Party requests, the Receiving Party shall, and shall cause each Receiving Party Representative to promptly (and no later than    days after the request):

• (a) return all Confidential Information to the Disclosing Party; and
• (b) destroy all Derivative Material and within   days of this destruction, provide a written certificate to the Disclosing Party confirming this destruction.

5. NO PUBLICITY.

The parties shall keep the existence of this agreement, and the transactions or discussions contemplated by this agreement, strictly confidential, except as required by law and except as the parties otherwise may agree in writing before a disclosure.

6. OWNERSHIP RIGHTS.

The Receiving Party acknowledges that the Confidential Information is, and at all times will be, the Disclosing Party's sole property, even if suggestions made by the Receiving Party are incorporated into the Confidential Information. The Receiving Party obtains no rights by license or otherwise in the Confidential Information under this agreement. Neither party solicits any change in the other party's organization, business practice, service, or products, and the disclosure of Confidential Information may not be construed as evidencing any intent by a party to purchase any products or services of the other party or as an encouragement to expend funds in development or research efforts. The Confidential Information may pertain to prospective or unannounced products. The Receiving Party may not use the Confidential Information as a basis on which to develop or have a third party develop a competing or similar plan or undertaking.

7. FUTURE PRODUCTS; RESIDUALS.

The confidentiality terms of this agreement do not limit the Receiving Party's right to develop or acquire products independently without use of the Confidential Information. Further, the Receiving Party may use for any purpose the residuals resulting from access to or work with the Confidential Information. However, the Receiving Party may not disclose the Confidential Information except as expressly permitted under this agreement. The term "residuals" means information in intangible form that is retained in memory by people who have had access to the Confidential Information, including ideas, concepts, know-how, or techniques contained in that Confidential Information. The Receiving Party is not required to limit or restrict the assignment of such persons or to pay royalties for any work resulting from the use of residuals. This section does not give the Receiving Party a license under the Disclosing Party's copyrights or patents.

8. NO OBLIGATION.

Nothing in this agreement obligates either party to proceed with any transaction between them, and each party reserves the right, in its sole discretion, to terminate the discussions contemplated by this agreement concerning the business opportunity, if any, and to cease further disclosures, communications, or other activities under this agreement on written notice to the other party. Any commitment to proceed with a transaction will be set forth in a separate agreement signed by the parties.

9. NO WARRANTY.

ALL CONFIDENTIAL INFORMATION IS PROVIDED "AS IS." THE DISCLOSING PARTY MAKES NO WARRANTIES, EXPRESS, IMPLIED, OR OTHERWISE, REGARDING THE ACCURACY, COMPLETENESS, OR PERFORMANCE OF ANY SUCH INFORMATION.

10. GOVERNING LAW; EQUITABLE RELIEF.

• (a) Choice of Law. The laws of the state of govern this agreement (without giving effect to its conflicts of law principles).
• (b) Choice of Forum. Both parties consent to the personal jurisdiction of the state and federal courts in County, .
• (c) Equitable Relief. The Receiving Party's breach of this agreement will cause irreparable harm to the Disclosing Party and monetary damages may not be a sufficient remedy for an unauthorized disclosure of the Confidential Information. If the Receiving Party discloses the Confidential Information in violation of this agreement, the Disclosing Party may, without waiving any other rights or remedies and without posting a bond or other security, seek an injunction, specific performance, or other equitable remedy to prevent competition or further disclosure, and may pursue other legal remedies.

11. AMENDMENTS.

No amendment to this extension will be effective unless it is in writing and signed by both parties or their authorized representatives.

12. ASSIGNMENT AND DELEGATION.

• (a) No Assignment. Neither party may assign any of its rights under this agreement, except with the prior written consent of the other party. All voluntary assignments of rights are limited by this subsection.
• (b) No Delegation. Neither party may delegate any performance under this agreement, except with the prior written consent of the other party.
• (c) Enforceability of an Assignment or Delegation. If a purported assignment or purported delegation is made in violation of this section, it is void.

13. COUNTERPARTS; ELECTRONIC SIGNATURES.

• (a) Counterparts. The parties may execute this agreement in any number of counterparts, each of which is an original but all of which constitute one and the same instrument.
• (b) Electronic Signatures. This agreement, agreements ancillary to this agreement, and related documents entered into in connection with this agreement are signed when a party's signature is delivered by facsimile, email, or other electronic medium. These signatures must be treated in all respects as having the same force and effect as original signatures.

14. SEVERABILITY.

If any provision in this agreement is, for any reason, held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provisions of this agreement, but this agreement will be construed as if the invalid, illegal, or unenforceable provisions had never been contained in this agreement, unless the deletion of those provisions would result in such a material change that would cause completion of the transactions contemplated by this agreement to be unreasonable.

15. NOTICES.

• (a) Writing; Permitted Delivery Methods. Each party giving or making any notice, request, demand, or other communication required or permitted by this agreement shall give that notice in writing and use one of the following types of delivery, each of which is a writing for purposes of this agreement: personal delivery, mail (registered or certified mail, postage prepaid, return-receipt requested), nationally recognized overnight courier (fees prepaid), facsimile, or email.
• (b) Addresses. A party shall address notices under this section to a party at the following addresses:
• If to the Disclosing Party:
• If to the Receiving Party:
• (c) Effectiveness. A notice is effective only if the party giving notice complies with subsections (a) and (b) and if the recipient receives the notice.

16. WAIVER.

No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this agreement will be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy will be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, and no waiver will constitute a continuing waiver, unless the writing so specifies.

17. ENTIRE AGREEMENT.

This agreement constitutes the final agreement of the parties. It is the complete and exclusive expression of the parties' agreement with respect to the subject matter of this agreement. All prior and contemporaneous communications, negotiations, and agreements between the parties relating to the subject matter of this agreement are expressly merged into and superseded by this agreement. The provisions of this agreement may not be explained, supplemented, or qualified by evidence of trade usage or a prior course of dealings. Neither party was induced to enter this agreement by, and neither party is relying on, any statement, representation, warranty, or agreement of the other party except those set forth expressly in this agreement. Except as set forth expressly in this agreement, there are no conditions precedent to this agreement's effectiveness.

18. HEADINGS.

The descriptive headings of the sections and subsections of this agreement are for convenience only, and do not affect this agreement's construction or interpretation.

19. EFFECTIVENESS.

This agreement will become effective when all parties have signed it. The date this agreement is signed by the last party to sign it (as indicated by the date associated with that party's signature) will be deemed the date of this agreement.

20. NECESSARY ACTS; FURTHER ASSURANCES.

Each party and its officers and directors shall use all reasonable efforts to take, or cause to be taken, all actions necessary or desirable to consummate and make effective the transactions this agreement contemplates or to evidence or carry out the intent and purposes of this agreement.

[SIGNATURE PAGE FOLLOWS]

Each party is signing this agreement on the date stated opposite that party's signature.

Free Unilateral Non-disclosure Agreement Template

How-to guides, articles, and any other content appearing on this page are for informational purposes only, do not constitute legal advice, and are no substitute for the advice of an attorney.

Unilateral non-disclosure agreement: How-to guide

In today's cut-throat business world, keeping secrets safe is crucial to staying ahead and protecting what's valuable. Whether it's your special technology, big plans, or customer information, it's vital to stop others from using it without permission.

That's where the Unilateral Non-Disclosure Agreement (NDA) comes in. This legal document is like a shield, protecting your private information when you share it with others. Unlike mutual NDAs, where both sides have to keep quiet, a unilateral NDA mostly helps the one sharing the secrets by making the other side promise to keep things quiet.

In this guide, we'll dive deep into unilateral NDAs, explaining what they're for, what they include, and how to make one. Whether you're starting a business, running a company, or working with clients, understanding and using unilateral NDAs can help keep your secrets safe and protect what's yours.

What is a unilateral non-disclosure agreement (NDA)?

A unilateral non-disclosure agreement is a legally binding contract between two parties, where one party (the disclosing party) disclose secret information to the other party (the receiving party), imposing necessities on the other party to maintain the confidentiality of the disclosed information. In essence, it serves as a safeguard to protect sensitive company information from unauthorized leaks or use.

How is a unilateral NDA different from a mutual NDA?

Unilateral NDA : Also known as a one-way NDA, this type of agreement is commonly used when only one party is disclosing confidential information to the other party. The receiving party agrees to keep the information that is disclosed confidential and refrain from disclosing it to third parties or using it for unauthorized purposes.

Mutual NDA : Also known as a two-way or bilateral NDA, this type of agreement is used when both parties are disclosing confidential information to each other. In a mutual NDA , both parties disclose confidential information, agree to keep it a secret, and refrain from disclosing it to third parties or using it for unauthorized purposes.

These two types of NDAs serve different purposes and are utilized based on the specific circumstances of the business relationship and the nature of the confidential information being shared.

When do you need a unilateral non-disclosure agreement?

A one-way non-disclosure agreement is a must-have in situations where keeping secrets safe is a top priority. Here are some key times when using one is super important:

Sharing proprietary business information with third parties

Whether you're disclosing the secrets of a trade, proprietary technology, joint venture, or strategic company plan, sharing secret information with third parties, such as vendors, suppliers, or strategic partners, requires the implementation of this NDA. This agreement ensures that your private data remains protected and prevents unauthorized leaks or use by the receiving party.

Collaborating with freelancers, contractors, or consultants

Engaging freelancers, contractors, or consultants to work on projects often involves sharing private data about your company’s operations, processes, or intellectual property. Implementing a unilateral NDA in such collaborations is essential to safeguard your proprietary information.

Legal framework guiding unilateral non-disclosure agreements

When creating and enforcing Unilateral Non-disclosure Agreements (NDAs) in the United States, it's crucial to be mindful of the legal guidelines set forth by relevant laws and fundamental principles. Here's a rundown of the important laws and principles that shape NDAs:

1. Uniform Trade Secrets Act (UTSA)

The Uniform Trade Secrets Act  (UTSA) acts as a shield for trade secrets, which are often the lifeblood of the sensitive information covered in NDAs. Adopted by many states, this law sets rules for identifying, safeguarding, and enforcing trade secrets. NDA documents often include UTSA provisions to ensure that these valuable secrets are shielded from third parties.

2. Defend Trade Secrets Act (DTSA)

The Defend Trade Secrets Act  (DTSA), introduced in 2016, offers federal protection for trade secrets, complementing state laws like the UTSA. Here, the trade secret owners can seek remedies such as injunctions, damages, and legal fees. The DTSA even has a provision for emergency orders to stop stolen trade secrets from spreading. NDA documents often refer to the DTSA to make sure they're in line with federal trade secret laws.

3. Common law principles of contract and confidentiality

In addition to statutory laws like the UTSA and DTSA, unilateral NDAs are also shaped by  everyday legal principles of trust and privacy . These principles lay the groundwork for how contracts, including NDAs, are understood and upheld. They also recognize the importance of keeping sensitive information confidential, especially in relationships like between bosses and employees, even without a formal agreement. NDA documents often nod to these principles to make sure everyone's rights and responsibilities are crystal clear.

Elements of a unilateral non-disclosure agreement

Let's take a closer look at what makes up these confidentiality agreements:

1. Identifying the parties

In an NDA, it's important to know who's in the picture. The disclosing party is the one sharing the private information, while the receiving party is the one promising to keep it under wraps. This part should include the full names and contact information of both parties to make sure everyone knows who's who.

2. Defining the confidential information

The NDA needs to clearly state what kind of information is considered confidential and should be kept secret. By being clear about what's private, the NDA makes sure everyone knows what's covered by the agreement.

3. Understanding the “obligations of the receiving party”

The NDA should outline the responsibilities and necessities of the party who is receiving the information regarding the handling and protection of confidential data.

The NDA should lay out what the receiving party needs to do to keep the information safe. This might mean promising to keep things confidential, not sharing or using the info for anything unauthorized, and taking reasonable steps to make sure it stays protected. Plus, the receiving party might have to limit who can see the information and give it back or let go of it if the disclosing party asks or if the agreement is terminated.

4. Understanding what is “no reverse engineering”

Reverse engineering is like taking apart a puzzle to see how it works. The "no reverse engineering" rule in a Unilateral Agreement (NDA) is like saying, "hands off" to the receiving party.

This rule makes sure the receiving party can't try to copy or figure out the secret information by taking it apart or analyzing it. It's all about keeping things safe and secure.

5. Duration of the agreement

Think of the NDA like a clock—it needs to say how long it's ticking. Mention the period, like a year, or until the secret information isn't secret anymore. And if things go south, there should be a way to end it early, like if both sides agree or if someone breaks the rules.

6. Governing law and jurisdiction

In the non-disclosure agreement, specify the applicable rules and the venue for dispute resolution. This involves stating the governing laws and the courts responsible for resolving disputes that may arise.

7. Exclusions

"Exclusions" in a Unilateral NDA are specific types of information that don't count as secrets and don't have to follow the confidentiality rules in the agreement. Here are a few examples:

• Information already in the public domain : If information is already out there for everyone to see, it doesn't count as secret. No blame comes to the receiving party if it's already public.
• Information independently developed by the receiving party : If the receiving party figured out the information on their own without using the disclosing party's secrets, it's not covered by the NDA.
• Information received from third parties : If someone else gave the receiving party the information legally and without any strings attached, it's not part of the NDA.
• Information disclosed with consent : If the disclosing party said it's okay to share the information, then it's not a secret anymore. Both parties have to agree to share it for it to count.

Tips for drafting a comprehensive document

When it comes to drafting a Unilateral Agreement (NDA), you've got to think it through to make sure it's strong enough to keep your confidential information safe and keep trouble at bay. Here are some important tips to help you create a solid NDA:

1. Customize the agreement to the specific needs and circumstances of the parties involved

Each business relationship and secret shared is unique. Make sure the NDA fits like a glove, addressing the specific needs, worries, and hopes of both sides. Consider things like what's being shared, how you know each other, and why you're sharing it. Tailoring the agreement means it's more likely to work for everyone and keep their interests safe.

2. Seek legal advice

Bring in legal help who has expertise when it comes to contracts and protecting ideas. They'll help make sure the NDA follows the rules and covers all the bases. Consulting a legal counsel can save you headaches later on and make sure that everyone's protected as best as possible.

3. Clearly define terms

Confusion in the NDA language can lead to disagreements. Use plain, easy-to-understand terms like "confidential information," "disclosure," "use," "duration," and "termination." Give examples to show what you mean and avoid vague wordings. Clear language makes sure everyone knows what they're agreeing to and keeps things running smoothly.

4. Consider the scope of confidentiality

Think carefully about what information the NDA protects and what it doesn't. Spell out exactly what's considered private—like trade secrets or customer lists—and what's not, such as information already out there or shared with permission. By setting clear boundaries, you can make sure the NDA does its job of keeping secrets safe while still letting business happen.

Getting started with safeguarding your secrets is easy with the free Unilateral NDA template from LegalZoom—it's like having a trustworthy guide to help you protect your valuable assets and navigate the complexities of business relationships with confidence.

As businesses work with others and share secrets, using Unilateral NDAs is a must. They’re a way to build trust and keep relationships strong. So, whether big or small, businesses should make unilateral NDAs a part of their routine. It's not just about legal paperwork—it's about keeping secrets safe, staying ahead in the market, and building trustworthy relationships in today's fast-paced business world.

Frequently asked questions

What's a unilateral non-disclosure (nda) agreement.

A unilateral nondisclosure agreement, or unilateral NDA, safeguards confidential company information such as customer data, inventions, and secrets of trade. It clarifies what information is confidential and helps prevent accidental leaks of proprietary details, technology, and intellectual property.

By establishing clear guidelines for confidentiality, an NDA informs colleagues about what should be kept confidential, reducing the risk of the secrets of a trade falling into competitors' hands.

To complete a unilateral nondisclosure agreement effectively, you'll need the following information ready:

• Sender's information : Your name or your company's name and contact details
• Recipient's information : Name and contact details of the party being asked to sign the NDA
• Project details : Explanation of the project or arrangement involved with the second party
• Effective timing : Determination of the agreement's start date and any associated deadlines

What are the five key elements of a non-disclosure agreement?

The five key elements of a non-disclosure agreement (NDA) typically include:

• Identification of the parties
• Definition of confidential information
• Obligations of the receiving party
• Duration of the agreement
• Governing law and jurisdiction

What are the types of NDA?

Predominantly, NDAs are of three types:

Unilateral NDA : Also called a one-way NDA, when a deal happens and one side shares secrets with the other. The receiver pledges to keep the disclosed information private and not share it with outsiders or misuse it.

Mutual NDA : Also known as a two-way or bilateral NDA, this pact comes into play when both parties share information. Both sides agree to keep each other's secrets confidential and not share them with third parties or misuse them.

Multilateral NDA : In this agreement, multiple parties share confidential information among themselves while agreeing to keep it confidential. It's like a circle of trust where everyone keeps each other's secrets safe.

These NDAs serve different purposes and are used based on the specifics of the business relationship and the confidential information shared.

Related categories

Related templates.

Business Plan Non-disclosure Agreement

Safeguard your business ideas with a business plan non-disclosure agreement template. Ensure your confidential information stays protected when sharing with potential partners, investors, and banks.

Employee Non-disclosure Agreement

Keep your employees informed about what is confidential and can't be disclosed to third parties. Safeguard the proprietary information with an employee NDA and maintain trust in the people working for you.

Independent Contractor Unilateral Non-disclosure Agreement

Protect your proprietary information when working with contractors. An independent contractor unilateral NDA establishes clear boundaries and terms.

Joint Venture Agreement Amendment

Make changes to your joint venture terms with a joint venture agreement amendment. Modify your partnership terms efficiently and effectively.

Management Services Agreement

Protect your business and outline the responsibilities when working with an outside management firm. A management services agreement helps define work terms, responsibilities, payment, and reporting expectations.

Mutual Non-disclosure Agreement

Level up your business partnerships with a mutual non-disclosure agreement. Ensure confidentiality and protect your sensitive data while sharing it with third parties.

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NDA Agreement Templates

New Jersey Non-Disclosure Agreement Template

An NDA establishes in writing the recipient’s agreement to refrain from disclosing the specified material to any uninvited parties or organizations. Use this New Jersey Non-Disclosure Agreement Template according to your requirements.

Virginia Non-Disclosure Agreement Template

Do you need a legally binding agreement that obligates all signatories to maintain the secrecy of certain information? The Virginia Non-Disclosure Agreement Template is available for free download at PandaDoc.

Georgia Non-Disclosure Agreement Template

Do you need a document that restrains the parties who signed it to certain information confidentiality in Georgia? Use this Georgia Non-disclosure Agreement Template.

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Arizona Non-Disclosure Agreement Template

A Non-Disclosure Agreement is a permitted document that attaches the receptions who sign it to certain data’s confidentiality. Use this Arizona Non-disclosure Agreement Template according to your requirements.

North Carolina Non-Disclosure Agreement Template

Do you need a legally binding agreement that obligates all signatories to maintain the secrecy of certain information? Get this PandaDoc North Carolina Non-Disclosure Agreement Template by downloading it.

New York Non-Disclosure Agreement

An NDA establishes in writing the recipient’s agreement to refrain from disclosing the specified material to any uninvited parties or organizations. Use this New York Non-Disclosure Agreement (NDA) Template.

Washington Nondisclosure Agreement Template

A Non-Disclosure Agreement is a legal document that binds all parties who sign it to maintain the confidentiality of certain information. Use this Washington Non-Disclosure Agreement Template as needed.

Florida Nondisclosure Agreement Template

Do you need a legal agreement that binds all parties signing to maintain the confidentiality of certain information? Get this Florida Non-Disclosure Agreement Template from PandaDoc by downloading it.

California Nondisclosure Agreement Template

An NDA establishes in writing the recipient’s agreement to refrain from disclosing the specified material to any uninvited parties or organizations. Use this California Non-Disclosure Agreement Template according to your needs.

Texas Non-disclosure Agreement Template

A Non-Disclosure Agreement is a legal document that binds the parties who signed it to certain information confidentiality. Use this professionally-written Texas Non-disclosure Agreement Template.

Delaware Non-Disclosure Agreement Template

A Non-Disclosure Agreement is a legal document that binds the parties who signed it to certain information confidentiality. Use this Delaware Non-Disclosure Agreement Template for free.

Relationship Non-Disclosure Agreement Template

This distribution agreement template is designed to help UK distributors accelerate their document signing process. Download your free copy today.

Real Estate Non-Disclosure Agreement

Trade Secret Non-Disclosure Agreement Template

Software Development Non-Disclosure Agreement

NDA Template

This NDA Agreement Template can be used between a company and a vendor or subcontractor to establish confidentiality between the two parties.

Types of NDA

NDA documents differ in terms of their type, the number of parties affected, and the jurisdiction of intended use including: 

• Unilateral / One-way. This document frees the disclosing party from any limitations on the use of confidential information while restricting the receiving party from its disclosing completely. The party intended to get the information often is not expected to share anything in return. The most common use cases are employment or seeking investments.
• Bilateral / Mutual. This type of agreement suggests both parties may share confidential information with each other and imposes equal limitations on its disclosure. Mutual NDAs are often used in product development, business cooperation, or research works.
• Multilateral. This type of agreement involves numerous parties and multiple types of private information. Unlike the two-above generic non-disclosure agreements, a multilateral NDA is often prepared for specific circumstances and with particular jurisdictions. An example is multiple companies cooperating on a single project or people working with different clients.
• Standalone. The document is represented as an independent confidentiality contract.  
• Incorporated. The NDA form supplements a more extensive pack of documents or agreements, e.g., employment agreements, partnerships, or licensing contracts.  

You also need to consider the geo factors (country, state) for your NDA to have legal enforceability. Some key ways that NDAs can differ by the state include:  

• Statute of limitations: NDA validity period may differ state by state. The most common terms of duration for an agreement range between 1-10 years.
• State laws: Some states may have specific laws regarding defamation, unconscionability, and enforceability terms.
• Confidentiality Marking: Some states may demand the information specified in an NDA to be distinctly written as ‘confidential’ or ‘proprietary’.

The best way to ensure that your NDA is legally binding and enforceable in a specific state is to use a respective non disclosure agreement template which you can find at PandaDoc.

When to Use an NDA Template

A non disclosure agreement (NDA) template comes in handy whenever you have to deal with sensitive information. These can be trade secrets, proprietary information, technical data, financial information, personal information, etc. You may need to share this information with someone or vice versa, encourage someone to share it with you. 

NDA use cases

• Business: When you enter into negotiations with a client, prospect, or partner, a mutual NDA template will help you keep your financial, product, or company information safe. 
• Human Resource Management. When a potential employee will have access to sensitive company information, a non-disclosure form can be used to protect that information during and after the hiring process.  
• Groundwork: If you are into science or perform any research work, you can use an NDA Agreement Template to ensure other researchers or investors won’t exploit your findings or share it without your consent. 
• Software Development: Signing a Software Development Non-Disclosure Agreement has become commonplace. With this, companies can comfortably discuss cooperation terms with potential service providers or supply free software trials to their clients.  
• Patents/Copyright. Having your employees and partners sign an international NDA example form is among the must-haves when it comes to protecting your patent work, copyright, and intellectual property (IP) rights.  

How to Make an NDA Legally Binding 

Creating an NDA from scratch can be daunting unless you get guidance from a professional attorney. Therefore, most people choose a template and customize it to their business case. 

Whether you use one of the PandaDoc ready-made, free NDA forms or write one on your own, you need to follow these steps to cover all the necessary aspects and create a legally binding document.

• Write the parties involved. Clearly define the disclosing and receiving parties. Each party has its name, address, and contact information.  
• Define confidential information. Specifically describe what information is considered confidential, and how it should be protected. Browse a standard NDA sample on PandaDoc to see how to get started formulating this section, or pick a free NDA example form and fill it on the go. When done, you’ll get a standard non disclosure agreement in PDF or ready to be shared online.
• State restrictions. Outline the specific restrictions on the use and dissemination of confidential information, including any limitations on the receiving party’s ability to use or disclose the information.  
• Write exclusions. Specify any exclusions from confidentiality, such as information that is already publicly available or that the receiving party can demonstrate was independently developed.  
• Define duration. Include the length of time the receiving party is bound by the agreement and the circumstances under which the NDA will terminate.  
• Write remedies for breach. Include provisions for remedies for breach of the NDA, including any legal or financial penalties that may be imposed in the event of a violation. 
• State governing law and jurisdiction. Specify which state or country’s laws will regulate potential disputes in court if any.
• Add signatures. Include signature lines for the parties involved, indicating their agreement to the terms.  

Check the PandaDoc collection of free NDA agreement templates and pick the one that fits your case. Complete it online and get a professionally written printable non-disclosure agreement which you can download in PDF or share online.

5 Reasons to Use NDA Agreement Template

Even a simple NDA template signed properly and on time can save you much trouble down the road helping you protect yourself from unauthorized use of your information. But in practice, it’s more than that. Among the reasons to use a confidentiality agreement template in your work:

• Protect confidential information. NDAs let you protect proprietary knowledge, business data, financial details, private, or any other information you want. By using a free NDA template, the parties can ensure that all sensitive information is protected and the terms of its usage are clearly defined.  
• Save time and money. Drafting a document from scratch can take up a great deal of time and can’t be done without attorney service, which can be costly. A premade template is a good foundation for your custom agreement which you can easily adjust to your use case. The PandaDoc service abounds with free NDA forms. All you need to do is just pick one that fits your needs.
• Ensure legitimacy. A professionally-written NDA template prevents you from disputes in court in case any of the parties violates the terms of the confidentiality contract.  
• Establish trust. Both parties can freely exchange information which eventually encourages negotiations and speeds up cooperation making the process comfortable and transparent.   
• Streamline document workflow. NDAs help to standardize and regulate the company document workflow between employees, partners, or clients. 

It’s important to note that, it’s always recommended to seek legal advice from an attorney to make sure that the NDA template is suitable for the specific situation and jurisdiction.

NDA Agreement FAQ

What should a non-disclosure agreement include.

A Non-Disclosure Agreement typically includes a description of the confidential information that is being shared, the restrictions on its use, and the consequences of any breach of the agreement. It also identifies the parties that come into agreement and presents their signatures. The optional elements include the exclusions from confidentiality, the duration period, and the Governing law and jurisdictions specifying which state or country’s laws will govern the NDA and where any disputes will be resolved.

What is an NDA form?

An NDA form, or Non-Disclosure Agreement form , is a legally binding document used to keep sensitive information confidential. It is a written contract involving at least two parties, a disclosing and receiving one. The document sets rules and regulations on the use of confidential information. By signing it, the parties often testify that they will keep that information secret and will not use it for any unauthorized purposes. 

What are the three types of NDA?

The three main types of NDA documents i nclude

• unilateral,
• bilateral, and
• multilateral NDAs.

These types suggest different numbers of parties involved and vary in their level of responsibilities in regard to the use of confidential information. It’s important to note that the NDA terms and conditions also differ based on the respective type of document.

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Related Practices & Jurisdictions

• Intellectual Property
• Litigation Trial Practice
• All Federal

Several states have passed new laws restricting use of nondisclosure agreements (NDAs), making it timely for companies to review their policies and practices. Below are some general “best practices” related to NDAs.

An NDA Is Still Critically Important.

It is still important to ensure that an appropriate NDA is in place before disclosing your company’s confidential information, whether you are exploring a potential joint development, procuring specialized parts, or even hiring a new employee. Disclosure without an NDA may bar your ability to maintain the trade secret status of your company’s key information, and allow others to freely use them based on your “voluntary” disclosure without an NDA.

Don’t Ignore Future Threats.

In negotiating an NDA, it is important to recognize that the relationship may eventually sour (e.g., the employee is terminated and goes to a competitor; the joint venture transaction does not come to fruition or ends badly; the other party’s representations were a ruse to gain access to your confidential information). Thus, your demands in the NDA negotiations should take into account the possibility that the other party may attempt to steal your trade secrets or accuse you of stealing its trade secrets.

Don’t Inadvertently Enter Into a Relationship Between the Parties Prematurely.

NDAs are often executed when parties are exploring a potential relationship (e.g., a sale of a business or a joint venture). If beneficial for your business, articulate in the NDA that neither party is agreeing to the potential relationship by signing it and, instead, its purpose is only to afford the parties protection against misuse of confidential information exchanged during the exploration of the potential relationship.

Consider the Direction(s) of Information Flow.

Another important consideration is whether confidential information will be exchanged by both parties. If the flow of information will be mutual, keep in mind that the obligations that you attempt to impose on the other party to protect your confidential information likely will be imposed on you by the other party to protect its confidential information. Thus, weigh the costs and benefits before interjecting into the negotiations a provision that imposes obligations to protect confidential information.

Scope of Protected Information Should Not Be Boilerplate.

Beware of provisions that require you to protect the other party’s non-confidential information. Protecting information is burdensome and expensive. Moreover, such provision could expand the potential scope of misappropriation or breach of contract claims that the other party may assert against you in the future. Articulate what is excluded from the scope of the duty to protect information under the NDA. For example, while it may seem obvious, explicitly state that any information that is readily ascertainable or independently developed is not protected under the NDA.

Be Mindful of the “As Required By Law” Carve Out.

Often NDAs will carve out from the obligation not to disclose confidential information “as required by law.” It is important to understand what is being carved under that exception so you know when you may disclose information the other party designates as confidential and when the other party can disclose information you designate as confidential. An obvious exception is when a court orders the disclosure of the information. But you should also be aware of a growing body of “whistleblowing” exceptions, including the following:

• The federal Defend Trade Secrets Act protects whistleblowers who disclose trade secret information to government officials or private attorneys for purpose of reporting or investigating suspected violations of law.[1]
• The Securities and Exchange Commission (SEC) considers any limitation on an individual’s ability to communicate directly with the SEC about a possible securities law violation illegal. [2]
• Other statutory provisions that afford protection for whistleblowers include 5 U.S.C. § 7211 (governing disclosures to Congress) and 5 U.S.C. § 2302(b)(8) (governing disclosures of illegality, waste, fraud, abuse or public health or safety threats).
• A number of states have restricted an employer’s ability to prohibit certain disclosures by an employee. For example, California’s Government Code § 12964.5 (effective January 1, 2019) makes it unlawful to require an employee “to sign a … document that purports to deny the employee the right to disclose information about unlawful acts in the workplace….” [3]

Pay Attention to Ownership Issues.

Watch out for proposed provisions that may result in a transfer of ownership of proprietary information. For example, a provision that a party disclosing a document will own any and all information in that document may give the counterparty an argument that it owns your information because it disclosed a document containing your information to you. The NDA should address which party will own any intellectual property derived from information disclosed by the parties (assuming the NDA contemplates the creation of intellectual property).

Do Not Ignore Third Party Access Rights and Obligations.

You should determine which third parties, if any, you may need to disclose the other party’s information to and negotiate a provision that meets your needs. For example, you may want to be able to share the other party’s information with your financial and/or legal advisors. On the flip side, the NDA should define clearly how the other party may use the information you disclose – namely, to which third parties, if any, such information may be disclosed and third parties’ obligation to protect the information to which they are given access. You may also want to include a provision requiring the other party to (i) give you notice if it is going to be acquired by a third party and (ii) to return all of your confidential information upon demand. That way, if the acquirer is one of your competitors, you can prevent it from gaining access to your confidential information.

Carefully Weigh Rights to Assign.

Special attention should be given to provisions that allow assignment of NDA rights to third parties or affiliates. Consider requiring the other party to obtain your consent prior to assigning the NDA or disclosing information subject to the NDA to third parties or even the other party’s affiliates since such affiliates may be your competitors. Even if the counterparty has no affiliates that are your competitors now, that may change in the future.

Set an Appropriate Duration for Confidentiality Obligations.

The length of confidentiality obligations should be driven by the nature of the information being disclosed – whether it is expected to remain a trade secret for a long time or will no longer be secret or valuable after a certain period. Confidentiality obligations may continue after the parties terminate their relationship. However, since protecting information can be expensive and burdensome, parties should avoid agreeing to protection period that is unnecessarily long.

Suitable Protection Measures Should Be Imposed.

NDAs often provide that “reasonable efforts” must be taken to protect the other party’s confidential information. But, given the wide latitude in determining “reasonable” efforts, this is sometimes the reason unnecessary litigation arises. For example, what is considered reasonable can vary depending on the scale and sophistication of a particular business. To avoid such dispute, your company should consider whether the NDA should expressly identify what specific protection measures the other party must use to protect your confidential information.

Consider Audit Rights.

The right to inspect the other party’s business records to determine how your confidential information is being used, disclosed, and protected may be important to assuage your concerns, should suspicions of misuse or negligent protection arise. They may be important later to build a case or to obtain an injunction against the other party, and in litigation (especially in jurisdictions where there are limited discovery rights, e.g., in certain non-U.S. countries or under certain arbitral rules).

Don’t Permit an Integration Clause to Backfire.

While it is generally a good practice to include an integration clause – a declaration that the written contract is the complete and final agreement between the parties and supersedes all prior negotiations – in NDAs, be careful not to inadvertently supersede (or worse, nullify) the terms of other agreements between the parties, which is sometimes is the main reason that the parties entered into a relationship in the first place.

Give Special Attention to Choice of Law and Forum Selection Provisions.

Careful consideration should be given to (i) the provision designating which state’s or jurisdiction’s law will apply to interpret the NDA, and (ii) which venue will be chosen to litigate any dispute that may arise, since these provisions may affect enforceability of the NDA, as well as availability of sometimes crucial injunctive relief (and, when foreign jurisdiction is involved, ability to obtain discovery that may be crucial to prove misappropriation). For example, some jurisdictions (e.g., China, Korea) do not provide for discovery similar to that allowed in the United States. Discovery rights also differ based on the arbitral forum chosen. These are essential provisions when it becomes necessary to enforce the NDA.

Educate Your Employees About the NDA and Obtain Their Acknowledgment.

In event that your company may later be required to show its exercise of reasonable efforts to comply with the NDA, it should educate employees who will have access to the other party’s confidential information about their obligations under the NDA, and better yet, obtain their acknowledgment of the training. This goal will also be furthered by maintaining appropriate records, including communications relating to the NDA with the other party, as well as documentation of the information designated as confidential under the NDA (which party designated it as confidential, which employees accessed it, how it was used, and where it is kept within your systems).

Reduce Risk of Misappropriation Claims by the Other Party.

Businesses should control access to the other party’s confidential information, as well as how it is utilized. When a product is being developed that potentially may later be falsely accused of having incorporated the other company’s confidential information, your company should carefully and methodically document the development of such product to be able to demonstrate that it was independently developed without use of the other party’s confidential information. Such documentation may allow your company to avoid (and, if necessary, prevail in) any potential litigation filed by the owner of the confidential information asserting misappropriation.

Stay on Top of Rights and Obligations at Termination of the Relationship.

Once the parties’ relationship is terminated, neither party should use or access the other’s confidential information except to return or destroy documents in compliance with the NDA. Plan in advance so that you can timely return or destroy the other party’s confidential documents and information, and to timely meet such demand by the other party (e.g., keep track from the onset of the location of documents containing such information, and dissemination of the information by the company’s email system, etc.).

[1]  18 U.S.C. § 1833.

[2]  Securities Exchange Commission, Rule 21F-17(a), available  here.

[3]  Other state legislation related to disclosures of sexual harassment and assaults in the work place include:

• New Jersey – Effective March 18, 2019. P.L. 2019, c.39 precludes any “provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment.”
• Tennessee – Effective May 15, 2018. Tennessee’s Pub. Ch. 965 prohibits an employer from requiring an employee “to execute or renew a non-disclosure agreement with respect to sexual harassment in the workplace as a condition of employment.”
• Vermont – Effective July 1, 2018. Act No. 183 prohibits employers from requiring “any employee or prospective employee, as a condition of employment, to sign an agreement or waiver” that restricts the employee from disclosing sexual harassment.
• Washington State – Effective June 7, 2018. Chapter 117, Laws of 2018 forbids employers from requiring employees to “sign a nondisclosure agreement … that prevents the employee from disclosing sexual harassment or sexual assault occurring in the workplace” as a condition of employment.

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7 Considerations While Drafting a Non-Disclosure Agreement (NDA)

Introduction.

Lawyers work with inventors to draft non-disclosure agreements for protecting confidential aspects of their invention. Almost every business discussion between two parties requires disclosure (or exchange) of confidential information, which mandates the execution of a non-disclosure agreement (NDA), also known as the confidentiality agreement. The main goal of NDA is to protect confidential and proprietary information shared by each party.

Parties sign non-disclosure agreement or an NDA to protect the confidential nature of discussions with others. Attorneys draft the NDA for each transaction in a customised manner to sure that all the aspects of the discussion are protected.

In most cases, NDAs act as first step towards subsequent business agreements and contracts, which include additional provisions to cover complexities of business transactions between the parties.

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While drafting a confidentiality (non-disclosure) agreement , it is crucial to ensure interests of both the parties is adequately secured by including the required provisions in a well-defined manner and excluding provisions that are not required.

Here are some important provisions to be considered while drafting a NDA:

Proper Definition of Confidential Information

Confidential information should be specifically defined for both the parties . Mostly generic definition is used to include a broad category of information, which is not advisable.

Always be specific to exactly define the scope of confidential information, which may be same or different for both the parties. For example, in case of a discussion involving mutual exchange of confidential information by both the parties, the type of information to be shared by each party may not be same . Hence, providing an exact definition of confidential information for each party makes sense in such cases.

Proper Definition of Confidentiality Obligations & Right to Take Action

Based on the same principle as explained above, confidential obligations for each party should be defined for both the parties, which again can be same or different for each party.

Similarly, it is important to define right to take proactive action for each party in case of breach of any provision of confidentiality agreement (NDA).

Inclusion of Related Clauses in NDA

It is a common practice to include various other related clauses in a NDA. However, in some cases, inclusion of such clauses may lead to issues as described below:

• Non-Compete Clause: including a non-compete clause in a NDA is not advisable as it can become problematic for both the parties. If the parties intend to include a non-compete provision, it should be a part of separate business agreement between both the parties .
• Assignment of Intellectual Property Rights (IPR): it is strongly advisable to specifically define IP assignment or non-assignment if such clause is included. In case it is decided to include IP assignment clause, appropriate care must be taken to ensure that the clause is not generic (broad) and its full scope and intent should be defined. A disclosing Party should specifically disclaim grant of any kind of IP rights .
• No Warranties: it is always advisable to state in NDA that confidential information is shared “As is” without any warranties .
• Non-solicitation: a non-solicitation clause can be included in the agreement with proper definition of scope, intent and duration, all of which can be practically enforced and justified. For example, such non-solicitation clauses can prevent each party from hiring and soliciting employees from other party for a certain period of time. In certain cases, non-solicitation clauses can be replaced by no-hire clauses as well.

Term (Duration) of NDA

Term of NDA may or may not be same as the term of contractual obligations, and hence, specific definition of term is required. Perpetual clauses should be avoided unless the same are within the context of discussions between both the parties.

NDA Executed by Authorized Signatory

It should be ensured that signatory should be authorized person to sign the agreement. In addition, full name and designation of parties should be included to make it legally binding.

Specifically Define Non-Disclosure and Non-Use Provisions

In both types of NDA – both mutual and one-sided, the agreement should include separate non-disclosure and non-use provisions.

Residual Clauses

Residual Clauses should be excluded from NDA as they are mostly friendly to the receiving party by specifying exceptions to restrictions against use & disclosure of confidential information.

How Courts Interpret Confidentiality Agreements?

Judicial interpretation of NDAs will vary across jurisdictions and laws of relevant country will prevail in case of any dispute.

One major challenge faced during such disputes is to prove that the NDA has actually been breached, and subsequently to prove that the party to NDA has indeed breached said NDA .

Summary – Avoid Confusion

It should be ensured that negotiations and discussions do not get stuck due to unacceptable clauses of the NDA. The lawyers involved in drafting and negotiating NDAs should always assign priority to the business goal , and unnecessary clauses should be avoided whereas utmost importance should be given to standard clauses in NDA.

In case of any complications, it is always better to stick to the primary goal of signing NDA, i.e. confidentiality and restricting usage of confidential information, while additional agreements should be executed to include related clauses (Non-compete, Non-solicit, IP Assignment, IP Licensing etc.).

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Assignment of Non Disclosure Agreement

Particular attention should be paid to the provisions allowing the transfer of NDA rights to third parties or related undertakings. Consider requiring the other party to obtain your consent before assigning the NDA or sharing information subject to the NDA with third parties or even with the other party`s affiliates, as these affiliates may be your competitors. Even if the counterparty does not have affiliates who are now your competitors, this may change in the future. 4. Miscellaneous – Does the agreement allow the recipient to share the discloser`s information with other people such as affiliates, consultants, consultants, etc.? Ask yourself if it`s nice. Will you agree to the recipient sharing your information with all of its affiliates (often loosely defined, e.B. not limited to 100% equity relationships, etc.) Will you agree if the recipient shares your information with people outside the organization, such as consultants and consultants, who may also work with other people like your competitors, etc.? 1. Mutual or unilateral (“unilateral”) – Should the agreement be reciprocal or unilateral? If only one party shares and discloses confidential information (that party, the disclosing party) and the other party receives only confidential information (that party, the recipient), a unilateral non-disclosure agreement may exist. Often, people are indifferent, but always think about the fact that you may want to stay in a clear position where you are not exposed to information from the other party that you might block in the future. If you agree to adopt a mutual confidentiality agreement, you should always ask yourself which part of the commitment is likely to be the most disclosing part. A mutual NDA can be designed in favor of the discloser or in favor of the recipient in some of the key points listed below, and simply accepting the notion of a mutual NDA (sometimes startups do this to appease the other party) does not eliminate the need to consider these points in light of who is likely to be more on the disclosure side. A protection order allows the parties to protect confidential information from disclosure beyond the disclosure ordered to the court.

This clause is important, especially in the event of a dispute, as each party can add documents to their court record. These documents could then become generally available to the public, which would negate the purpose of the NDA! Non-disclosure agreements are a crucial but often overlooked tool that allows start-ups to grow, establish strategic partnerships, and explore new business relationships necessary for product development or bring to market. These agreements are often short (sometimes only one or two pages) and cause many founders to forego legal advice to overcome this “formality” and work with the other party to the NDA. However, NDAs are important agreements with potentially profound implications for the protection of a company`s confidential information and intellectual property, and mismanagement of NDAs can affect a startup years later. 9. Limited liability, etc. – Most trade agreements contain provisions according to which the liability of the parties is limited in various ways. Not all of these restrictions are present in an NDA. For example, in the event of misuse of the discloser`s confidential information, the discloser would expect compensation for consequential damages.

Therefore, the provisions relating to the limitation of liability must be carefully considered. While it is generally good practice to include an integration clause – a statement that the written contract is the complete and final agreement between the parties and supersedes all previous negotiations – in non-disclosure agreements, you should be careful not to inadvertently replace (or worse, cancel) the terms of other agreements between the parties, which is sometimes the main reason why the parties have entered into a relationship. Yes! There should be a clause in the NDA that selects the laws that govern the state (or/province or country, if outside the United States). This clause should also probably choose an appropriate place or it may provide that the method of dispute resolution is arbitration rather than litigation. It is important to choose a reasonable jurisdiction to apply the NDA, as well as one that is not too inconvenient or costly. [3] Other state laws relating to the disclosure of harassment and sexual assault in the workplace are as follows: Often, NDAs deviate from the obligation not to disclose confidential information “as required by law.” It is important to understand what is provided for in this exception so that you know when you can disclose information that the other party designates as confidential and when the other party can disclose information that you designate as confidential. An obvious exception is when a court orders the disclosure of the information. But you should also be aware of a growing number of “whistleblowing” exceptions, including the following: 7. Assignment by the recipient – Beware of the clause in the agreement that allows the recipient to assign the agreement to others, e.B.

in the case of a merger and acquisition transaction (e.B. if the recipient sells its assets and business activities to third parties). The buyer of the assets and transactions may actually be a company with which you would not agree to share your confidential information. The same applies in the event of a change of control over the recipient, especially if the recipient can share the information with its affiliates (this second scenario is rarely treated, but the risk is always present). Keep in mind that the NDA is generally only sufficient to regulate the exchange of confidential information from one party to another and the processing of that information. Sometimes startups believe that once an NDA is signed, they are protected enough to start a business engagement. For example, startups sometimes sign a potential employee or service provider for an NDA and then start working (with their business understanding agreed orally or in an email). In reality, this could mean that other important legal points, such as agreement on whether or not the intellectual property produced or created in the relationship is attributed to either party, have been overlooked. The NDA should either strive to cover these issues (it is not uncommon for an NDA to include a clause on the “assignment of inventions” when signed with an employee, service provider or consultant) or serve the parties solely for the purpose of assessing and negotiating their future commitment, while an agreement on other important and commercial law issues should be added. Strong non-disclosure agreements are essential tools for companies to protect their commercially valuable information as well as the personal data of customers and employees. However, the strength of the agreement may depend on the importance of the provisions formulated.

It`s always important to make sure that a proper confidentiality agreement is in place before disclosing your company`s confidential information, whether you`re exploring a possible joint development, looking for specialized parts, or even hiring a new employee. Disclosure without an NDA may affect your ability to maintain the trade secret status of your company`s key information and allow others to use it freely on the basis of your “voluntary” disclosure without an NDA. An assignment clause governs whether a party may assign its rights or obligations under the NDA to a third party. There are situations where the assignment could be useful or harmful, depending on who assigns it. 3. Time limit – There is a period of time when the information shared is covered by the agreement, and then there is a separate period when the information disclosed remains protected by the agreement. Be sure to set an appropriate period of time (usually about 3-5 years). One could try to say that confidentiality obligations last forever until the information is simply no longer confidential, but often people will not want to sign an indefinite agreement; In this case, you should try to add a statement that information that constitutes a trade secret of the disclosing party will continue to benefit from all post-protection provisions under applicable law after the expiration of the term of the contract. The cost of a lawsuit can be considerable, so some NDAs include a provision that unauthorized disclosure of confidential information causes irreparable harm.

This does not necessarily mean that the judge will automatically issue an injunction, but it could make it easier to prove irreparable harm or improve the court`s availability of short-term emergency measures. .

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Shapiro Faces Scrutiny Over Sexual Harassment Complaint Against Aide

The case has attracted renewed criticism now that Josh Shapiro, the governor of Pennsylvania, is on the short list to be Kamala Harris’s running mate.

By Sharon LaFraniere

Gov. Josh Shapiro of Pennsylvania, who is on the short list to be Kamala Harris’s running mate, is facing renewed criticism for his handling of a sexual harassment complaint against a longtime top aide.

The state agreed to pay $295,000 last September to settle the complaint against Michael A. Vereb, then Mr. Shapiro’s head of legislative affairs and one of his closest advisers. An employee had accused Mr. Vereb of making repeated and graphic sexual overtures and then criticizing her job performance after she refused him. She resigned rather than continue to work for him, her only other option, she said in her written complaint.

Mr. Vereb, 57, kept his post for six months after his accuser first alleged misconduct. He resigned only after local reporters obtained a copy of the employee’s complaint, weeks after the settlement had been secretly reached. The governor’s office praised Mr. Vereb for his “dedicated service” when he left.

Mr. Shapiro weathered scrutiny last fall over his office’s response to the case, but it reignited in recent weeks as he became a front-runner to join Vice President Harris on the ballot. She is expected to announce her choice by Tuesday.

The National Women’s Defense League, a nonpartisan group founded in the wake of the #MeToo movement, asked the Harris campaign this past week to look into the case, saying Mr. Shapiro’s office “should have done a better job” in both preventing sexual harassment and handling the complaint. Democrats, including a candidate for Pennsylvania treasurer, have also taken aim at the governor for his office’s response to the allegations.

In a statement on Friday night, Manuel Bonder, a spokesman for Mr. Shapiro, said the governor “was not aware of the complaint or investigation until months after the complaint was filed.” Mr. Shapiro should have been notified of the allegations sooner, Mr. Bonder said, and he has now ordered that he be immediately informed of any such complaint against a senior staff or cabinet member.

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