An NDA (Non-Disclosure Agreement) is a legal agreement between two or more parties designed to protect confidential information. An NDA helps to keep your business agreements secure as they protect sensitive information from being given, shown, shared or disclosed to unwanted parties.

They crucially outline what can and cannot be shared with people outside of the business and provide clear consequences for breaching the NDA.

NDAs can over a wide range of information, such as:

  • Products – protect new products, designs and processes from competitors.

  • Employees – keep information accessed and shared with employees safe.

  • Clients – if you share contract terms or pricing with a client, an NDA can keep this information secure from competitors.

  • Suppliers

  • Merging businesses or takeovers – if your business is buying or selling another company, this may need to be kept confidential.

Businesses of all shapes and sizes might benefit from having an NDA in place. There are 3 main types of NDAs:

  1. One way – where one party shares confidential information with the other party.

  1. Mutual – two parties share the confidential information, and each party can decide how their information can be used.

  1. Multiparty – where there are three or more parties involved and at least one is sharing information, you may use a multiparty NDA.

When you draft an NDA, it is extremely important to get all the details correct so that you can ensure your business is fully protected. There are a few details which should be considered when drafting an NDA:

  • Name who is involved.

  • Specify the confidential information.

  • Outline who is responsible for what.

  • Say why it’s being shared.

  • Define the length of the agreement.

  • The consequences of any breach

  • Agree on how the NDA will end.

  • Clearly agree any exceptions.

If NDAs are used properly, they are useful at protecting vital information, but they also have their own drawbacks. Here are a few:

  1. Reputation risks – it may come across as secretive or distrusting, especially if you are hiding certain information from employees.

  2. Protection is time-bound – the information you are protecting is only protected for the time stated in the agreement. This leaves the information vulnerable to being exposed after the NDA expires

  3. International challenges – if you are getting someone to sign an NDA across an international border, it can be difficult due to differences in legal systems.

For advice regarding NDAs and confidentiality agreements, please don’t hesitate to contact one of our legal experts through our online contact form or call us on 0845 287 0939.