When you need to protect sensitive information whether it’s a business idea, financial data, trade secrets, or client lists a nondisclosure agreement (NDA) can offer the legal assurance you need. NDAs are useful in many settings, including business partnerships, employment arrangements, or collaborative projects. Knowing how to get a nondisclosure agreement helps ensure that your confidential information is not shared without permission. Whether you’re an entrepreneur, a freelancer, or an employee, understanding the steps involved in obtaining and using an NDA is essential for protecting your intellectual property and private data.
What Is a Nondisclosure Agreement?
Definition and Purpose
A nondisclosure agreement is a legally binding contract that establishes a confidential relationship between parties. It outlines what information must remain private and prohibits the receiving party from disclosing or using that information without consent. NDAs help protect sensitive information in situations where secrecy is essential for competitive or legal reasons.
Common Uses
Nondisclosure agreements are often used in
- Business negotiations involving proprietary data or business plans
- Employment contracts to protect internal processes and systems
- Freelance work where clients share confidential project details
- Startups seeking funding from investors
- Collaborations with suppliers or manufacturers
Types of Nondisclosure Agreements
Unilateral NDA
This type of NDA involves two parties, but only one is sharing confidential information. The receiving party agrees not to share or misuse the disclosed data. It is commonly used with employees or contractors.
Mutual NDA
A mutual NDA, or bilateral agreement, is used when both parties exchange confidential information and agree to keep each other’s data private. This is typical in joint ventures or collaborations.
Multilateral NDA
This less common type involves three or more parties, where at least one party discloses information and all parties agree to maintain confidentiality. It reduces the need for multiple separate agreements.
Steps to Get a Nondisclosure Agreement
1. Identify the Need for an NDA
First, determine if you need an NDA by considering whether the information you’re about to share is sensitive, valuable, or proprietary. Ask yourself if disclosure could harm your business, reputation, or intellectual property rights.
2. Decide on the Type of NDA
Choose the appropriate type of NDA based on the relationship. If you’re the only one disclosing sensitive information, a unilateral NDA is usually enough. For mutual sharing, choose a bilateral or mutual NDA.
3. Draft the NDA
You can create an NDA from scratch, use a reliable NDA template, or hire a lawyer to draft one tailored to your specific needs. When drafting or reviewing an NDA, make sure it includes these essential components
- Parties involvedFull names and addresses of all signatories.
- Definition of confidential informationClearly outline what is considered confidential.
- Obligations of the receiving partySpecify how they must protect the information.
- ExclusionsDescribe what information is not protected, such as publicly known data.
- DurationState how long the NDA will remain in effect.
- Consequences of breachDetail the legal repercussions of violating the agreement.
- JurisdictionIdentify which legal system governs the agreement.
4. Review the Terms Carefully
Before signing, both parties should read the NDA carefully. If legal jargon is unclear, consider seeking legal advice. Make sure the terms are reasonable and enforceable, especially the length of confidentiality and the scope of what is protected.
5. Negotiate If Needed
If either party finds some clauses too restrictive or unclear, renegotiation is possible. Changes should be made before the agreement is signed. Common areas for negotiation include the duration of confidentiality, the definition of sensitive information, and liability clauses.
6. Sign the Agreement
Once all parties agree on the terms, the NDA should be signed and dated by everyone involved. Digital signatures are legally acceptable in many jurisdictions, but in some cases, a physical signature may be required for extra legal strength.
7. Store the NDA Securely
After signing, store the NDA in a secure, accessible location. Keep both digital and physical copies in case you need to enforce it or refer to its terms in the future.
When to Use a Nondisclosure Agreement
Before Sharing Business Ideas
If you’re pitching an idea to potential investors or partners, an NDA can protect your concepts from being stolen or copied without permission.
Hiring Employees or Freelancers
When onboarding new employees or contractors who will handle sensitive data, NDAs help prevent them from using your confidential information for personal gain or to benefit competitors.
During Mergers and Acquisitions
Companies involved in acquisition talks or due diligence often share sensitive financial and operational data. An NDA ensures this information remains protected throughout negotiations.
Developing New Products
When multiple individuals or companies work together to create something new, an NDA ensures everyone involved maintains confidentiality until a product is launched or patented.
Legal Considerations
Are NDAs Enforceable?
In most countries, properly drafted NDAs are enforceable. However, courts may refuse to enforce them if they are overly broad, vague, or unfairly restrictive. Ensure the terms are reasonable, especially regarding time limits and geographic scope.
What Happens If an NDA Is Breached?
If someone violates the terms of an NDA, legal remedies may include
- Injunctions to stop further disclosure
- Monetary damages for losses suffered
- Termination of business contracts
- Other penalties allowed under contract law
To pursue legal action, the injured party usually needs to show proof of the breach and the resulting harm. Courts consider whether the information truly qualified as confidential and if the agreement was clear and reasonable.
Tips for Using NDAs Effectively
Keep Language Clear and Specific
Avoid overly complex legal language. Use simple terms to define what is confidential, what is not, and what each party is expected to do.
Tailor the NDA to the Situation
Generic NDAs may not always suit your needs. Customize your agreement to the context whether it’s for a business partnership, an employee role, or a freelance arrangement.
Review Periodically
If you’re using an NDA as part of a long-term relationship, review and update it as needed to reflect changes in scope, data, or risk level.
Consult Legal Experts
While templates are useful, legal advice ensures that your NDA complies with local laws and addresses specific risks you may face.
Knowing how to get a nondisclosure agreement is essential for anyone dealing with sensitive or proprietary information. Whether you’re starting a business, forming a partnership, hiring talent, or collaborating on a new project, an NDA helps secure your information and builds trust. By identifying your need, choosing the right type of NDA, drafting a clear and enforceable agreement, and following the proper legal steps, you can confidently protect what matters most. Proper use of NDAs is a smart and proactive way to manage confidentiality and prevent legal issues down the road.