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What is an NDA?

A Non-Disclosure Agreement (NDA), also called a confidentiality agreement, is a legal contract in which one or both parties agree to keep certain information secret. It defines what counts as confidential, how it may be used, and what happens if it is disclosed.

NDAs are one of the most common business documents because they let you share sensitive information, an idea, a product plan, client data, with some legal protection before a deal, partnership, or hire is finalized.

When do you need one?

Sign an NDA before sharing anything you would not want a competitor or the public to see. Common situations include:

• Pitching a business idea or invention to a potential investor or partner
• Hiring employees, contractors, or freelancers who will see internal information
• Discussing a merger, acquisition, or the sale of a business
• Sharing product designs, source code, or pricing with a vendor
• Bringing a consultant or agency into a confidential project

Types of NDA

The right structure depends on who is sharing information. We tailor the agreement to the type you need, including:

• Unilateral (one-way): only one party discloses confidential information, common for employees and contractors
• Mutual (two-way): both parties share confidential information, common in partnerships and negotiations
• Multilateral: three or more parties share information under one agreement instead of several separate ones

What to include

A strong NDA leaves no doubt about what is protected and for how long. Make sure yours covers:

• Full names and roles of the disclosing and receiving parties
• A clear definition of what counts as confidential information
• Standard exclusions, such as information that is already public or independently developed
• The permitted purpose for using the information
• How long the confidentiality obligations last
• Consequences of a breach and the governing law
• Signatures and dates for every party

Common mistakes to avoid

• Defining confidential information so broadly that the agreement is hard to enforce
• Forgetting the standard exclusions for public or independently developed information
• Leaving out how long the obligations last
• Signing after the sensitive information has already been shared
• Using a one-way NDA when both sides will be sharing information