Non-Disclosure Agreement (NDA)

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.

A non-disclosure agreement is a written contract that lays down what information is considered to be confidential and prohibits the signing parties from revealing such information. Relying on other parties’ promises is risky, and that’s where a written contract comes in handy. A sample non-disclosure agreement template defines what information must not be revealed by the parties, what information is not confidential, for how long it must be kept secret, what happens if a party reveals the information, and other terms.

The most common use cases include keeping the confidentiality of intellectual property, financial information, transaction details, and others.

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:

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.

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.

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. 

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.

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.

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.

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.

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.

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.

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. 

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.

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.

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.

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.

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

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