What Is Non-Disclosure Agreement?

Published On: Jul 23, 2022Last Updated: Jul 23, 20223 min read

Any business entity has confidential details or information they want to keep intact. There are confidential details you don’t want your rivals to know about. That’s where you need a non-disclosure agreement. A Non-Disclosure Agreement (NDA) gives you legal support in such cases. You don’t want the details of your startup or company to go beyond your employees. The agreement that helps to keep all the crucial decisions, details and other credentials of the company confidential is known as a non-disclosure agreement. 

A Non-Disclosure agreement binds the confidential information of the parties entering into an agreement. Once the parties enter into the agreement, it will bind the parties. They can not disclose any of the matters mentioned in the agreement.

When any crucial information is revealed to a third party, the same can be protected with an NDA. A Non-Disclosure Agreement is signed at the beginning of any discussions/negotiations/affiliation/partnership to secure all the essential information.

Importance of NDA

An NDA is a legal document for securing all the vital information of any company. Any party entering into the agreement would be legally liable if any breach is caused in the context of this agreement. Any information (with written communication) that is confidential shall fall under the criteria of confidential information. It is always advisable to have written communication to avoid any conflict in the future. Significant advantages of a Non-Disclosure Agreement can be found as follows:

1. Information protected

When two parties enter an NDA, all the essential information mentioned in the agreement shall be protected, and any information that gets leaked into the public domain shall be considered a breach of the agreement.

2. If information gets leaked, the party can be sued

The disclosing party has the right to sue the receiving party if any information that is mentioned in the non-disclosure agreement is leaked in the public domain or disclosed to a third party that is not part of the Non-Disclosure Agreement.

3. Privacy is maintained

One of the biggest advantages of the Non-Disclosure Agreement is the guarantee of privacy. The privacy of any individual or any legal entity is maintained. If the parties get into a non-disclosure agreement, they can go ahead with the work without the fear of disclosing any confidential information.

Important Clauses and Types of NDA

If some important clauses are not included in a Non-Disclosure Agreement, it defeats the whole purpose of the agreement. The NDA should be drafted with all the important clauses included. Read our blog for detailed information regarding the important NDA clauses and types of NDA.

A Non-Disclosure Agreement can be of many types pertaining to the parties entering into the agreement. 

The type of an NDA depends on the parties entering into the agreement. Significant types of NDA are: 

  1. Unilateral NDA
  2. Bilateral NDA
  3. Multilateral NDA

Effectiveness of NDA

NDAs are essential for conserving your market share, and not entering into a non-disclosure agreement can be disastrous for a business. You can not risk any critical information slipping into the hands of your rivals or competitors. It can lead to data loss and financial loss to the company. 


If you want to protect your company’s confidential information, you should get your business protected even before entering into partnerships or negotiations. A Non-Disclosure Agreement legally binds the involved parties to keep the information confidential. If some information does get leaked, legal action can be taken to protect your business and you will have an upper hand. LegalWiz.in is the one-stop destination for all your legal worries. Contact us now to get in touch with our experts. We will help you get started!

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Rutu Mistry
About the Author

Rutu Mistry

Rutu Mistry is an advocate and is associated with Legalwiz.in, handling the matters related to IPR and Corporate. She believes in consistency and discipline in her work to create an impact in the legal fraternity.

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