NDA Drafting

Non-Disclosure Agreement (NDA) – A Complete Guide

What is an NDA?

A Non-Disclosure Agreement (NDA) is a legally binding contract used to protect confidential information shared between parties. By signing an NDA, the receiving party agrees not to disclose, misuse, or share the confidential information for unauthorized purposes.

• Business partnerships
• Employment and contractor relationships
• Start-ups pitching ideas to investors
• Technology and product development
• Mergers & acquisitions
• Client–service provider relationships

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Types of NDAs

Only one party shares confidential information (e.g., Employer ↔ Employee). Both parties share sensitive information (e.g., Joint ventures). More than two parties share information.

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Essential Clauses in an NDA

A strong NDA should contain the following sections:

• Full legal names
• Registered addresses
• Roles of Disclosing Party and Receiving Party

2. Definition of Confidential Information

• Technical data
• Business strategy, financials
• Customer lists
• Software code
• Prototypes
• Trade secrets

3. Purpose of Disclosure Why is the information being shared? (E.g., evaluation of investment opportunity, collaboration, employment.) Must specify that the receiving party:

• Will keep information confidential
• Will not disclose to third parties
• Will use info only for the stated purpose
• Will store/protect it securely

5. Exclusions from Confidentiality

• Information already in public domain
• Information independently developed
• Information lawfully obtained from another source
• Information required to be disclosed by law/court order

6. Term/Duration

1. Duration of the agreement (e.g., until project completion)
2. Duration of confidentiality obligations (often 2–5 years, sometimes perpetual for trade secrets)

7. Return or Destruction of Information Upon termination, the receiving party must return or delete all confidential material. 8. Remedies for Breach

• Injunctive relief
• Damages (monetary)
• Indemnification
• Termination of business relationship

9. Governing Law & Jurisdiction 10. Dispute Resolution

• Arbitration clause (common)
• Court jurisdiction
• Mediation (optional)

11. Miscellaneous Clauses

• Non-compete (if applicable; varies by jurisdiction)
• Non-solicitation
• No-waiver clause
• Severability clause

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Procedure for Creating and Executing an NDA

• Identify the parties
• Define what information is confidential
• Choose the type of NDA (unilateral/mutual)
• Draft the clauses (listed above)
• Have legal counsel review (recommended)
• Sign the NDA
  • Signatures of both parties
  • Physical or digital signature
• Exchange copies
• Begin sharing information only after the NDA is fully executed

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Key Things to Keep in Mind When Drafting an NDA

Avoid vague phrases like "all information." Courts may find such clauses unenforceable. Allow sharing with employees or partners only if necessary and bind them by confidentiality too. Clear penalties make breaches less likely. Overly broad NDAs (too long, too wide) may be struck down. Document when and what information was shared. For example, non-compete terms may be unenforceable in some jurisdictions.