---
name: non-disclosure-agreement
description: Use when asked to draft, review, or explain a non-disclosure agreement (NDA) — a legal agreement protecting confidential information shared between parties, mutual or one-way — for general guidance only, not legal advice; always direct the reader to consult a qualified lawyer for their specific situation and jurisdiction.
---

# Non-Disclosure Agreement

A non-disclosure agreement (NDA) is a legal contract in which one or
more parties agree not to disclose confidential information shared
during a business relationship — a negotiation, a partnership, an
employment relationship, a vendor evaluation. Its job is to let parties
share sensitive information with a legal backstop against misuse,
rather than either not sharing it at all or sharing it on trust alone.

## Key components

- **Definition of confidential information** — what counts: technical
  data, business plans, customer lists, source code, financial
  information, or whatever the parties actually intend to protect,
  stated specifically enough to be enforceable (see pitfalls below).
- **Obligations** — what the receiving party must and must not do:
  typically using the information only for the stated purpose,
  limiting who internally can see it, and protecting it with reasonable
  security measures.
- **Exclusions** — information the agreement does *not* cover, commonly
  information that was already public, was already known to the
  receiving party before disclosure, was independently developed
  without reference to the shared information, or was later disclosed
  lawfully by a third party. Exclusions like these are what keep an NDA
  enforceable rather than absurdly broad.
- **Term and duration** — how long confidentiality obligations last,
  both for the agreement itself and, often, for the confidentiality
  obligation specifically (which can outlive the agreement's other
  terms).
- **Remedies** — what happens on breach: typically injunctive relief
  (stopping further disclosure) and damages, stated in the agreement
  rather than left to be argued from scratch later.

## Mutual vs. unilateral NDAs

- **Unilateral (one-way)** — only one party discloses confidential
  information and only the other party is bound to protect it. Typical
  when a company shares information with a candidate, contractor, or
  vendor who isn't sharing anything comparably sensitive back.
- **Mutual (two-way)** — both parties disclose confidential information
  to each other and both are bound. Typical in partnership discussions,
  M&A due diligence, or any relationship where information flows both
  directions.

Using a unilateral NDA when both sides are actually sharing sensitive
information leaves one party's disclosures unprotected; using a mutual
NDA when only one side is disclosing adds unnecessary complexity for no
real benefit.

## Common pitfalls

- **Overly broad "confidential information" definition** — a
  definition that tries to cover literally everything shared between
  the parties is harder to enforce, since courts are more skeptical of
  restrictions that aren't tied to anything specific or reasonable.
- **No expiration term** — a confidentiality obligation with no end
  date is both harder to justify and, in some jurisdictions, more
  likely to be found unenforceable as unreasonable in scope.
- **Signed before it's actually needed** — putting an NDA in place as a
  formality well before any sensitive information is shared, then
  letting it go stale or forgotten, means nobody checks its terms when
  disclosure actually happens.
- **Assuming an NDA prevents all use of general knowledge** — most NDAs
  don't (and can't enforceably) stop someone from using general skills
  or industry knowledge gained during the relationship, only the
  specific confidential information covered.
- **Ignoring which party's obligations matter** — a business signs a
  unilateral NDA drafted by the other party without checking which
  direction it protects, discovering only later it didn't cover their
  own disclosures.

## A note on legal advice

This is general guidance on what NDAs typically contain and why, not
legal advice. Enforceability, required language, and appropriate scope
vary by jurisdiction and situation — always direct the reader to have
an actual NDA drafted or reviewed by a qualified lawyer before signing.

## Learn more

- [[contract-review]] for the broader review discipline an NDA, like
  any contract, should go through before signing.
- [[service-level-agreement]] for a different kind of agreement often
  negotiated alongside an NDA in a vendor relationship.
- [[statement-of-work]] for the deliverables-focused document that
  often follows once an NDA lets both parties share what's needed to
  scope the work.