A non-disclosure agreement, or NDA, is a contract that restricts how someone may share confidential information. They are common in business deals, hiring and product development.
One-way and mutual
- One-way: only one party discloses secrets and the other promises to protect them.
- Mutual: both sides share confidential information and both are bound.
Key terms
- A clear definition of what counts as confidential information.
- Exclusions, such as information that is already public or independently developed.
- How the information may be used and who may see it.
- How long the obligation lasts.
- What happens to documents when the relationship ends.
- Remedies, including injunctions, if the agreement is broken.
Limits
An NDA cannot lawfully stop someone from reporting illegal activity to authorities or from exercising certain legal rights, and some states limit NDAs in employment and harassment settings. Overbroad or unlimited terms can be hard to enforce.
Practical tips
- Share only what is necessary.
- Make sure the right people sign for each company.
- Mark confidential material clearly.
- Have a lawyer review high-stakes agreements, such as those involving trade secrets or investors.
Frequently asked questions
Is a verbal NDA enforceable?
It is much harder to prove. Use a signed written agreement.
How long should an NDA last?
Commonly a few years, though trade secrets may be protected for longer. The right length depends on the information.