Non-disclosure agreement (NDA)

What is a non-disclosure agreement (NDA)?

A non-disclosure agreement, usually referred to as an NDA, is a contract used to protect confidential information shared between parties. Its core purpose is to define what information is confidential, who may access it, how it may be used, and what consequences may follow if it is disclosed without authorisation. In business practice, NDAs are commonly signed before negotiations, due diligence, cooperation with contractors, employment discussions, technology transfers, and other situations where one party needs to disclose sensitive data to another.

An NDA does not create confidentiality only in a general or informal sense. It translates that expectation into clear contractual obligations. A well-drafted NDA usually identifies the parties, describes the confidential information, specifies permitted uses, sets exclusions, regulates the duration of confidentiality, and provides remedies in the event of breach. Depending on the transaction, it may be unilateral – where only one party discloses information – or mutual, where both sides exchange confidential materials.

Although the term NDA is widely used in international business, its legal effect depends on the wording of the agreement, the governing law, and the factual context in which it is signed. In practice, an NDA should be drafted with attention to enforceability, proportionality, and compatibility with broader legal rules, including labour law, competition law, intellectual property law, data protection law, and trade secret protection.

What does an NDA cover in practice?

In practical terms, an NDA may cover a broad range of information, provided that the protected material is described with sufficient clarity. This may include technical know-how, source code, product specifications, manufacturing methods, financial data, pricing models, customer lists, supplier arrangements, business strategies, internal reports, commercial terms, and information disclosed during investment or acquisition talks. In some cases, an NDA also covers the fact that negotiations are taking place.

At the same time, not all information can or should be treated as confidential. Most NDAs exclude information that is publicly available, already lawfully known to the receiving party, independently developed without use of the disclosed material, or obtained from a third party without breach of duty. These exclusions are important because they reduce ambiguity and improve enforceability.

A properly structured NDA should also regulate how confidential information may be handled. This often includes restrictions on copying, internal circulation, data storage, return or destruction of documents, and disclosure to employees, advisers, or subcontractors on a need-to-know basis. In cross-border business, it is also common to address data transfers, cybersecurity standards, and jurisdiction for disputes.

In many transactions, the NDA is only the first layer of protection. It is often followed by more detailed clauses in investment agreements, share purchase agreements, service contracts, employment contracts, or technology licensing arrangements. For that reason, an NDA should be consistent with the broader contractual framework rather than treated as an isolated document.

When is it worth using an NDA?

Using an NDA is usually advisable before any meaningful disclosure of commercially valuable information. For businesses, this often arises during talks with investors, potential buyers, joint venture partners, distributors, software developers, consultants, manufacturers, and employees who will have access to internal information. For private individuals, an NDA may also be relevant in cooperation involving inventions, creative projects, advisory services, or settlement negotiations.

An NDA is particularly useful where the information has real economic value because it is not generally known and where uncontrolled disclosure could weaken a party’s negotiating position, damage market advantage, or undermine the value of intellectual assets. This is especially relevant in sectors driven by innovation, specialised know-how, confidential customer data, or non-public financial information.

Early legal review is important because a poorly drafted NDA may create only an illusion of protection. Clauses that are too vague, too broad, internally inconsistent, or detached from business reality may be difficult to enforce. Problems also arise when the agreement does not define the purpose of disclosure, fails to regulate onward sharing, or omits practical enforcement tools such as injunctive relief, contractual penalties where legally permissible, or obligations that survive termination or expiry.

A prompt consultation with a lawyer may help avoid avoidable mistakes, future disputes, liability exposure, and financial loss. This is often the case when a party is about to disclose strategic information, enter negotiations with an unknown counterparty, or rely on a template that does not reflect the specific risks of the transaction.

Legal support related to NDAs

Law firm support in matters related to non-disclosure agreements may include in particular:

drafting unilateral and mutual NDAs adapted to the specific transaction or business relationship,
reviewing NDA templates proposed by counterparties, investors, contractors, or group entities,
assessing whether confidential information is properly defined and whether the scope of protection is enforceable,
negotiating confidentiality clauses in broader commercial, employment, technology, and investment agreements,
advising on trade secret protection and overlap with intellectual property, data protection, and employment obligations,
analysing cross-border issues, including governing law, jurisdiction, and disclosure to foreign affiliates or advisers,
supporting clients in cases of suspected breach of confidentiality, including contractual claims and urgent protective measures.

Need legal assistance with an NDA? Contact us.

Non-disclosure agreement (NDA)