A non-disclosure agreement (NDA) is a legally binding contract that protects confidential information shared between parties. This comprehensive guide covers everything you need to know — from basic definitions to advanced clauses and enforcement.
A non-disclosure agreement is a contract where one or more parties promise to keep certain information confidential. It creates a legal obligation to protect sensitive business information, trade secrets, and proprietary data from unauthorized disclosure.
A non-disclosure agreement — commonly abbreviated as NDA — is one of the most fundamental legal documents in business. Also known as a confidentiality agreement, confidential disclosure agreement (CDA), or proprietary information agreement (PIA), it serves a single critical purpose: protecting sensitive information.
When two parties enter into a business relationship — whether it's a partnership, employment, investment, or consulting engagement — they often need to share information that gives them a competitive advantage. Without legal protection, this information could be leaked, stolen, or misused.
An NDA creates a confidential relationship between the parties. The party receiving confidential information agrees not to disclose it to third parties, not to use it for unauthorized purposes, and to take reasonable steps to protect it.
If the receiving party violates these obligations, the disclosing party can seek legal remedies including injunctive relief (a court order to stop the disclosure), monetary damages, and in some cases, attorney's fees.
Only one party discloses confidential information. The other party agrees to keep it secret.
Best for: Employee agreements, contractor NDAs, investor pitches where only one party shares information.
Both parties share confidential information and both agree to protect each other's secrets.
Best for: Business partnerships, joint ventures, M&A discussions, technology collaborations.
Three or more parties share information. One agreement covers all parties instead of multiple bilateral NDAs.
Best for: Multi-party deals, consortium projects, complex business arrangements.
Strategies, roadmaps, and growth plans
Formulas, processes, and proprietary methods
Revenue, pricing, and financial projections
Customer databases and contact information
Prototypes, specifications, and blueprints
Source code, algorithms, and architectures
Campaigns, research, and market analysis
Patents pending, R&D, and innovations
Full legal names of the Disclosing Party and Receiving Party, including company names and addresses.
A clear, comprehensive definition of what information is protected. This is the most important clause in any NDA.
What the receiving party must do (protect the information) and must not do (share, copy, or misuse it).
Information that is NOT covered — publicly available data, independently developed information, or legally required disclosures.
How long the NDA lasts and how long confidentiality obligations survive after the agreement ends.
What happens to confidential materials when the agreement terminates.
Legal consequences of a breach — injunctive relief, damages, indemnification, and attorney's fees.
Which jurisdiction's laws apply and where legal disputes will be resolved.
Yes. Non-disclosure agreements are legally enforceable contracts in the United States and most countries worldwide. When properly drafted and executed, they provide strong legal protection for confidential information.
For an NDA to be enforceable, it must meet basic contract requirements: offer and acceptance, consideration (something of value exchanged), and mutual assent. The terms must also be reasonable — courts may refuse to enforce NDAs with overly broad definitions or unreasonable time periods.
Federal law that provides a civil cause of action for trade secret misappropriation. Requires NDAs to include a whistleblower immunity notice.
Adopted by 48 states, provides a framework for trade secret protection including injunctive relief and damages for misappropriation.
Federal and state laws that make electronic signatures legally valid, allowing NDAs to be signed digitally with full legal effect.
Complete hub covering all aspects of NDA agreements.
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Get started →The primary purpose is to protect confidential information from being shared with unauthorized parties. It creates a legal obligation to keep sensitive business information private and provides legal remedies if that obligation is violated.
Anyone who will have access to confidential information should sign an NDA. This includes employees, contractors, business partners, investors, consultants, and any third party involved in sensitive discussions.
Breaking an NDA is typically a civil matter, not criminal. However, if the breach involves theft of trade secrets, it could lead to criminal charges under the Economic Espionage Act or state laws. Most NDA violations result in lawsuits for damages.
Most NDAs last 1-5 years, though the confidentiality obligations may survive longer. Trade secrets can be protected indefinitely. The duration should be reasonable for the type of information being protected.
Yes, you can refuse to sign an NDA. However, the other party may then refuse to share confidential information with you or proceed with the business relationship. It's common practice to negotiate terms you're uncomfortable with.
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