Non-Disclosure Agreement (NDA) Template

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A non-disclosure agreement, or briefly NDA, is a legally binding document that are used to ensure no confidential information or materials will be disclosed during cooperation between parties. Create your NDA template in minutes, download it in PDF, and use it for your legal needs as necessary.
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Document Types
Employee Non-Disclosure Agreement (NDA)
This NDA helps to keep information confidential within the employment relationship.
1.9K downloads
Mutual Non-Disclosure Agreement (NDA)
This document is used when parties need to share confidential information between them.
1.9K downloads
Paper titled "Non-Disclosure Agreement"; pen, stamp, man and woman shaking hands, desk

A non-disclosure agreement is a legal contract where the parties involved keep some information confidential obtained during a business relationship. In some situations, such as when working with partners or hiring people, businesses occasionally have to share sensitive information with other people outside the organization. Signing a written contract will oblige other persons to keep that information confidential. With the non-disclosure agreement template by Lawrina, you can determine what information should remain secret, prohibit the revealing of such information, and set out the legal consequences in case the other party violates their duty. Protect your business by reviewing this PDF template, filling out the essential elements, and downloading the final version of your document.

Parties of the Non-Disclosure Agreement

  • Disclosing Party: discloses confidential information. In business relationships, the employer would be the disclosing party. In some non-disclosure agreements where both parties disclose sensitive information, such as partnership agreements between two companies, both can be disclosing parties.

  • Receiving Party: gets the sensitive information. In the employer-employee relationship, the employee would be the receiving party. In other cases, both parties can share corporate secrets and be receiving parties in the same non-disclosure agreement.

Key Terms

  • Disclosing Party: The person or entity that discloses the sensitive data to the other party. In some agreements, both parties disclose sensitive information to each other. 

  • Receiving Party: The person or entity that receives the confidential information. Both parties can be receiving parties if both disclose and receive secret information.

  • Confidential Information: This includes the description of the information that must be kept confidential by the party that receives it. The description can be broad or specific. For example, it can state that all financial reports are confidential. It can also define only financial reports related to sales of a specific product to be confidential. 

  • Exclusions of the Confidential Information: the agreement may determine some exclusions. For example, when financial and earnings statements are made public by the disclosing party, it is not considered confidential information anymore.

  • Non-disclosure Obligations: Aside from the general duty to keep the information confidential, this section can specify measures the disclosing party requires the receiving party to implement to keep it safe. That may include the use of encrypted servers, role-based access, prohibition of the use of the data, and so on.

  • Timeframe: This section defines the time period for which the receiving party is obliged not to reveal confidential information. Parties can agree on a specific period, such as two years, or limit the duration to a specific event or public disclosure of the data, until meeting some legal requirements, or others. In rare cases, parties agree to an indefinite time frame.

  • Governing Law: In the case of a dispute, the court will apply the governing law to the non-disclosure agreement. This section is important because it can determine the legal consequences in the case of a breach of contract. In the US, NDAs are regulated mostly by state contract laws, and they vary significantly. For example, New York allows companies to bring legal action within six years of the breach, while Ohio prescribes a time limit of eight years. There are some differences in the interpretation of provisions among courts in various states as well.

Why Are Non-Disclosure Agreements Important?

The most common reason for signing a non-disclosure agreement anytime you are about to share sensitive information about your business is to protect your interests. Aside from that, it sets out clear expectations between parties about what must be kept secret and for how long, which leads to outcomes such as:

  • Protecting business’ competitive advantages

  • Protecting trade secrets and intellectual property

  • Protecting financial information

  • Compliance when signing contracts that require confidentiality clauses

  • Risk mitigation

  • Building trust between parties

Types of a Non-Disclosure Agreement

There are two main types of non-disclosure agreements: a unilateral NDA, and a mutual NDA. The one you need depends on the reciprocity, i.e., whether one or both parties would reveal and receive confidential information. There are other ways to differentiate between the types, but this is the most common one.

Unilateral NDA

When parties sign a unilateral non-disclosure agreement, only one receives confidential information. For example, when a SaaS company hires a software developer to work on an upcoming product, they would want them to sign an agreement to protect the intellectual property. In this case, only the developer receives secret information.

Mutual NDA

In mutual non-disclosure agreements, both parties receive and provide confidential information. A good example would be a contract between an ecommerce business and a marketing agency. The ecommerce business would keep the agency’s pricing confidential. The agency would keep the ecommerce store’s sales volume secret. They sign a non-disclosure agreement to oblige each other to keep the received information confidential. 

What Is the Purpose of a Non-Disclosure Agreement?

The purpose of a non-disclosure agreement is to keep your confidential information safe, as if you never revealed it to anyone. Gaining a competitive advantage often involves keeping some information to yourself. However, doing business with other persons and entities sometimes requires you to reveal such information.

In the examples above, the software developer would be ineffective in their work without receiving critical information. The marketing agency would not be able to provide their services without tracking the sales volume of their client.

Communicating your confidential information with people outside your organization is an inevitable part of business. That’s where non-disclosure agreements come in. You can easily draft one to fit your needs. If you don’t know what it should look like, a standard non-disclosure agreement may help. They come with standard clauses covering most business cases.

How To Write a Non-Disclosure Agreement

Writing a non-disclosure agreement yourself boils down to identifying the elements it should contain and adjusting them to your needs. Here, we’ll delve into the usual ones. You don’t have to include them all. You just have to ensure that they bring the desired outcome – your confidential information remaining secret.

1. Disclosing and Receiving Parties

Start by identifying the disclosing and receiving parties. If you are drafting the contract based on a non-disclosure agreement template, request the information of the other party and fill it in. The identifying information includes the name, mailing address, email address, and other information for identifying a person. When signing a  contract with a company, include the business name, business address, mailing address, and possibly tax ID number.

Add your information as well.

2. Confidential Information

This is the most important part of your non-disclosure agreement. Describing the confidential information clearly ensures that the other party and, eventually, the judge would understand what information was meant to be confidential. Failure to do this properly may mean that your business is not protected despite signing the contract. It is recommended to have a sample non-disclosure agreement where the confidential information will be clearly drawn out, and your partners or contractors sign it.

3. Exclusions from Confidential Information

Parties have the flexibility to exclude some information from the scope of the non-disclosure agreement. The most common exclusions include publicly available information, information the receiving party knew about before signing the agreement, mandatory disclosures of confidential information to government and law enforcement bodies, and others. This is what you may have in your non-disclosure agreement template.

But, sometimes, circumstances call for negotiating additional exclusions. The receiving and the disclosing party have the freedom to add mutually agreed exclusions in their contract to fit their specific needs.

4. Non-Disclosure Obligations

The non-disclosure obligations are an essential part of your sample non-disclosure agreement. The most common ones include specifying the duty of confidentiality, how to care for the received information, what security measures to implement, when and how to return or destroy it, notification in case someone gets unauthorized access, prohibition for the receiving party to use the information for their own purposes, and others. Parties have the flexibility to choose which ones suit their needs best.

5. Time Frame & Termination

The time frame defines how long the receiving party must keep information confidential. Oftentimes, the agreement expires when the confidentiality duty expires, but in some cases, the parties may prescribe different termination conditions. Some non-disclosure agreement templates include a survival clause, which means that specific provisions of the agreement will still be in effect even after its expiry. 

6. Jurisdiction

Choosing the jurisdiction that applies to your sample non-disclosure agreement is essential for the complete protection of your business. Different states and countries have different regulations about contracts. 

For example, a requirement for reasonable care in a non-disclosure agreement governed under the Illinois Uniform Trade Secrets Act may be scrutinized by the courts in the absence of a precise definition of what reasonable care is. On the other hand, the Delaware Uniform Trade Secrets Act allows Delaware courts to interpret reasonable care as care that the receiving party would give to their own confidential information. That’s why the choice of jurisdiction is essential for contracts.

7. Signatures

Written agreements must be signed by parties to be valid. Non-disclosure agreement templates, once customized, must be signed by the receiving and the disclosing parties to come into effect. The signatures are often formatted as a block with lines that include the parties’ names, the date of signing, and space for the actual signature. Parties can sign the documents electronically if the chosen jurisdiction recognizes electronic signatures.

8. Additional Clauses

Standard non-disclosure agreements often include some additional clauses. For example, many include a Force Majeure clause, which applies in case of a fire, flood, earthquake, terrorist attack, or something else beyond your control. Another common addition is the survival clause, which defines what provision remains in effect upon the expiry of the time period for which the receiving party must keep the information confidential. Other common additional provisions in a non-disclosure agreement include waiver, entire agreement clause, and others.

When To Use a Non-Disclosure Agreement

Use a non-disclosure agreement every time you want to ensure that the receiving party won’t disclose the  sensitive information to other people. Do not rely on promises. A serious business should have all its contracts in writing. It gives you peace of mind. And if they do disclose it to someone else, you could take them to court and get compensation.

Common Use Cases

The most common situations where businesses sign non-disclosure agreements include:

  • Business partnerships or joint ventures
  • Mergers and acquisitions
  • Employees who get access to a product in development
  • Protection of intellectual property
  • Investments and fundraising
  • Provision of financial services
  • Consulting services
  • Beta testing
  • Research and development
  • Legal proceedings
  • Real estate transactions

However, the use cases for a non-disclosure agreement are endless.

When Not To Use a Non-Disclosure Agreement

There are situations where the provisions of a non-disclosure agreement would be void, such as when you require the receiving party not to disclose illegal activities or when the covered information is already public. In other cases, it may be a bad business practice to have a non-disclosure agreement. For example, overusing it would make you look secretive and untrustworthy.

Also Read

Frequently Asked Questions

How long should an NDA last?

A non-disclosure agreement remains legal until it fulfills its goal of protecting confidential information. The standard non-disclosure agreement provided by your client will cover the duration of the project and some time afterward. For example, if you are a designer for a six-month marketing campaign, the agreement would be of the same term because all the materials would be published in that period.

What happens if you break a non-disclosure agreement?

Breaking a non-disclosure agreement may lead to monetary compensation for the disclosing party, legal fees, and other expenses. The possible consequences include:

  • Monetary damages to the disclosing party for the damages they have suffered due to the breach;
  • Liquidation damages, which is a predetermined amount to be paid when the actual damages are hard to determine;
  • Reputational damages, if your business partners or potential employers learn that you have violated such an agreement;
  • Legal fees of the other party, if any;
  • Criminal penalties, in certain circumstances.
     
What types of information can I protect with an NDA?

With a non-disclosure agreement, you can protect any type of information that is in your interest to remain confidential. Non-disclosure agreements most often protect intellectual property, strategic information, financial data, and other information that bring a competitive advantage to a business. In addition, that information must be confidential. You cannot protect information already widely known or that the receiving party got from outside the business relationship. 

Contract laws do not discriminate unless you protect publicly available information or want to prevent the disclosure of illegal or immoral activities.