What an NDA does

A Non-Disclosure Agreement (NDA) — also called a confidentiality agreement — is a contract between two or more parties that establishes a confidential relationship. The party or parties that sign the NDA agree not to disclose information covered by the agreement to third parties without authorisation.

NDAs are used to protect commercially sensitive information — business strategies, product roadmaps, pricing structures, client lists, financial data, and technical specifications — before and during any situation where that information must be shared to make progress.

Types of NDA

Unilateral (one-way) NDA

The most common type. One party (the disclosing party) shares confidential information with another party (the receiving party), and the receiving party agrees not to disclose it. Used when only one party is sharing sensitive information — for example, a business briefing a contractor, or a company sharing its financials with a prospective acquirer.

Mutual (bilateral) NDA

Both parties share confidential information with each other and both agree to keep the other party's information confidential. Used in partnership discussions, joint ventures, or any negotiation where both sides need to share sensitive information.

Multilateral NDA

Three or more parties agree to keep each other's information confidential. Used in multi-party joint ventures or consortium arrangements.

What an NDA must contain

• Identification of the disclosing party and receiving party (full legal names and addresses)
• Definition of confidential information — what is and is not covered
• Obligations of the receiving party — how they must handle the confidential information
• Permitted purpose — the specific purpose for which the confidential information may be used
• Exclusions from confidentiality — what information falls outside the agreement
• Duration — how long the confidentiality obligation lasts
• Governing law and jurisdiction — which country's law governs the agreement

Standard exclusions from confidential information

Most NDAs exclude information that is already publicly available, was already known to the receiving party before disclosure, is independently developed by the receiving party without reference to the disclosed information, or is required to be disclosed by law or court order. These exclusions protect the receiving party from liability for information they could not reasonably have kept confidential.

When to use an NDA

• Before any business partnership or joint venture discussion
• Before hiring contractors, consultants, or employees with access to sensitive information
• Before sharing your product roadmap, pricing, or business strategy with a prospective partner
• Before sharing financial information with a prospective investor, lender, or acquirer
• Before any vendor or supplier receives access to client data, source code, or trade secrets

Electronic signatures on NDAs

Electronic signatures are legally valid for NDAs in all major jurisdictions including the United States (E-SIGN Act), the UK (Electronic Communications Act 2000), and the EU (eIDAS Regulation). An NDA signed electronically with email OTP verification is as enforceable as a wet signature for almost all commercial confidentiality purposes.