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Non-Disclosure Agreement (NDA)
The agreement that makes a conversation safe to have. Sign it before you disclose anything. An NDA signed afterwards protects nothing that was already said.
- Confidential information defined broadly enough to be worth having
- The exclusions written in, so the definition survives being argued with
- Term, governing law and jurisdiction settled up front
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- We will also review an NDA somebody else has sent you
- Drafted by seasoned lawyers around what your business actually holds
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What a non-disclosure agreement is
A legal agreement that keeps the information you share confidential, and gives you a remedy if it is not.
A non-disclosure agreement, or NDA, is a legal agreement that ensures the confidentiality of the data you share with others. It gives you legal protection, making sure the people who get access to your confidential data do not misuse it. It comes in useful whenever you disclose your business’s confidential and proprietary information, which, as an entrepreneur, you do often.
It works in the other direction too. Other businesses you are working with, or about to work with, may share their confidential information with you and ask you to sign an NDA, so understanding the nuances of one is worth as much when you are the receiving party.
It is the most commonly used legal document in business, because a wide range of confidential information is exchanged between businesses every day. Source code for a software company, customer data for an e-commerce business, information about an invention: all of it should be protected before it is shared, not after.
- Parties
- Two or more
- Anyone competent to contract
- Signed
- Before you disclose
- Legally binding
- Yes
- A suit lies for a breach
- Typical term
- 2 to 10 years
- Or perpetual
- Reusable
- Yes
- Change the names and the categories
- Stamp paper
- Advisable
- Not mandatory
- Notary
- Not required
Why businesses choose LegalWiz.in
- Experienced professionals who draft a custom NDA around your business
- We will review an NDA you have received from somebody else
- We can run you through the nuances of an agreement that has been sent to you
- Quality drafts at cost-effective rates
- Always open to suggestions and iterations as your business needs them
What the drafting covers
Tell our experts the purpose behind having the NDA, and they will take care of the rest.
- A consultation call about who you are disclosing to and what you are disclosing
- A custom NDA drafted by an experienced lawyer for your business needs
- A review of an NDA a counterparty has sent you, where that is what you need
- The nuances of the agreement explained before you sign anything
- Revisions after you have read the draft
What the agreement should include
A definition of confidential information
Define it clearly, and define it broadly, so that it covers almost everything you are likely to share. A narrow definition protects only the examples somebody thought of on the day.
And what is not confidential
Not everything shared is confidential, and saying so protects the rest. Anything already public, anything the other side already knew, anything a third party is free to disclose, and anything they developed independently.
Permissible disclosure
When the information may be shared onward, and to whom: advisers, employees, a regulator. An NDA with no route for a legitimate disclosure gets broken rather than followed.
Term, law and jurisdiction
How long the obligations last, which law governs the agreement, and which courts decide a dispute. The last two matter most where the parties are in different countries.
When you need an NDA
Four situations where information leaves your control, and only one of them is a hire.
Investors
During discussions with investors at the time of raising funds, when you are describing the business in more detail than you would to anyone else.
Collaborators and partners
When you share confidential information with a third party while exploring a business partnership, before there is any other contract between you.
Employees and freelancers
When you share confidential and proprietary data with your own staff or with a freelancer working on your systems.
Professional advisers
Disclosure made while taking professional consultancy. Advisers are usually under their own duty of confidence, and an NDA makes the scope of it explicit.
The two NDAs a business signs
One with your own staff and one with everybody else. They are signed at different moments and only one of them has a problem with what the signer gets in return.
| Attribute | NDA with an employee | NDA with a third party |
|---|---|---|
| When you need which | ||
| Your own staffAnyone on the payroll who will see trade secrets, customer data, financial information or technical know-how in the course of their work. | Anyone outsideA prospective investor, a collaborator, an outsourced developer, a freelancer, a consultant or a professional adviser. | |
| At the startAt the beginning of the employment, alongside the rest of the joining paperwork. Signing one later is possible but changes what has to be given in return, as the row below sets out. | Before you talkBefore the first substantive conversation. An NDA signed after the information has been shared protects nothing that was said before it. | |
| One wayThe employer discloses and the employee receives. There is rarely anything flowing back that needs protecting. | Often both waysTwo businesses exploring a partnership usually each have something to protect, so the obligations are written to bind both sides equally. | |
| Getting it right | ||
| Yes, if it is laterAn NDA signed at the start is supported by the job itself. Put one in front of somebody already employed and they should be offered a benefit over and above their existing salary, or there is nothing they received for agreeing to it. | The deal itselfThe exchange of confidential information, and the discussions it is for, is what each side receives. Nothing separate is needed. | |
| YesThe same obligations are often written into the employment contract as a confidentiality clause instead of a separate agreement. A standalone NDA is clearer and easier to point at. | SometimesA confidentiality clause inside a service agreement or a contractor agreement covers the same ground once the deal is signed. A separate NDA is what covers the period before it, when there is no other contract yet. | |
| Not mandatoryIt may be drafted on plain paper or on stamp paper, whichever the employer prefers. | Not mandatoryAdvisable rather than required, and it needs no notary. Stamping is about proving the document existed on the date it says it did. | |
| Next step | Know more | Know more |
Swipe the table sideways. Open any attribute to read the detail behind both answers.
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What is the purpose of entering into an NDA?
It protects the confidential information you are sharing with third parties. It creates the trust that your information will not be spilled out without your consent, and it ensures you have a legal remedy in the event that it is.
Who can enter into one?
Parties capable of entering into a contract under the Indian Contract Act, 1872 can sign an NDA.
How many times can I use the same NDA?
With as many parties and as many times as you like. Each time you enter into one with a different party you may have to make minor changes to the names of the parties and to the categories of confidential information.
What counts as confidential information?
All the details you consider confidential and proprietary to your business, which if disclosed to third parties without your knowledge are likely to cause losses to you or to the business.
What cannot be covered is information already in the public domain, information the other party already knew, facts disclosed by a third party entitled to disclose them, and anything the other party developed independently.
Is an NDA legally binding?
Yes. It is a legally binding document and the parties can file a suit in the event of a breach of any of its terms.
Does it need stamp paper and a notary?
It is not mandatory but it is advisable to use stamp paper, which helps establish the validity and the existence of the document. An NDA does not require a notary.
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