Non-Disclosure Agreement (NDA) Template

A non-disclosure agreement (NDA) is a contract between two parties in which one party shares confidential information and the other promises not to disclose it. Confidential information is often sensitive, technical, commercial, or valuable in nature (e.g., trade secrets or proprietary information). Both parties sign the NDA, creating a binding contract to keep the information secret.

Non-Disclosure Agreement – By State

Types of Non-Disclosure Agreements

Main NDAs

Employment & Contractor NDAs

Business & Financial NDAs

Real Estate NDAs

Industry-Specific NDAs

Table of Contents

• Non-Disclosure Agreement - By State
• Types of Non-Disclosure Agreements
• What Is a Non-Disclosure Agreement?
• When to Use a Non-Disclosure Agreement
• Types of Information Protected by an NDA
• What Should an NDA Include?
• How to Write an NDA?
• Sample Non-Disclosure Agreement
• Resources

What Is a Non-Disclosure Agreement?

A non-disclosure agreement (NDA) is a legally binding document that creates a confidential relationship between the disclosing and receiving parties. It prevents the receiving parties from revealing sensitive information to unauthorized third parties. The parties entering this agreement refer to it to understand the terms under which they must keep the outlined information private.

When to Use a Non-Disclosure Agreement

During Business Negotiations and Partnerships

An NDA is essential in business negotiations, including partnerships, joint ventures, or potential mergers. It ensures confidentiality when sharing sensitive information like trade secrets, financial reports, and intellectual property. This legal agreement protects your company from potential information misuse, allowing for open discussions without the risk of competitors gaining access to crucial data.

Hiring Employees or Contractors

NDAs play a key role when bringing on new employees or contractors who will have access to proprietary information, such as business strategies, client databases, or internal processes. By signing an NDA, these individuals are legally obligated not to disclose confidential information, safeguarding your business’s intellectual property and trade secrets during and after their tenure.

Developing a Product or Service

An NDA ensures that all discussions and details remain within the team during the development phase of new products or services, especially when involving third parties like vendors or engineers. This agreement prevents the unauthorized disclosure or use of your proprietary ideas and methodologies, preserving your competitive advantage.

Maintaining Privacy During Mergers and Acquisitions

Mergers and acquisitions involve the exchange of significant sensitive information, including financial details, organizational structures, and employee data. An NDA guarantees the confidentiality of this information, maintaining trust between the involved parties and protecting their interests until the transaction is complete.

Working with Consultants or Freelancers

When engaging consultants or freelancers, an NDA secures your proprietary information, preventing them from sharing or exploiting your sensitive data, such as marketing plans or financial projections. This protective measure ensures that your confidential information remains safeguarded even after the project concludes.

What Should an NDA Include?

Here are the key elements that an NDA should include:

• Parties involved: Name the disclosing and receiving parties. The “Disclosing Party” is the individual or entity sharing information. The “Receiving Party” is the individual or entity receiving information.
• Transaction: Explain the potential business relationship that the disclosing and receiving parties want to enter.
• Confidential information: Define confidential information for your specific agreement. You may define all information the disclosing party shares as confidential. Alternatively, you can define it only as information specifically marked as “Confidential” or information relating to a specific topic, such as “Accounting Information” or “Customer Information.”
• Specific exclusions: State when the obligation of confidentiality will not apply. For example, it may not apply if the information is already in the public domain, the receiving party already had access to the information before signing the NDA, or the information is independently developed by the receiving party.
  • Furthermore, the obligation doesn’t apply if the receiving party has prior written consent to disclose the information.
• Obligations: Explain the receiving party’s obligations. For example, you may require them to maintain specific security processes and procedures to keep sensitive information confidential. You may also require them to refrain from mentioning they’re discussing or negotiating a transaction with the disclosing party.
• Non-compete clause: Decide if you want to include a non-compete clause in which you limit the receiving party’s work relationship with competing companies.
• Non-solicitation clause: Restrict the receiving party’s ability to solicit employees or independent contractors from the disclosing party.
• Termination date: Determine when the agreement will end, whether it be upon the consummation of the “Transaction” or after a certain length of time passes. You can also state that the agreement will end when the parties write and sign a separate written agreement.
• Remedies: Stipulate the consequences of breaking the NDA
• No license: Explain that the NDA doesn’t give either party any patent, copyright, or ownership of the information provided.
• Severability: State that if one part of the NDA is ruled invalid in court, that part will be removed, and the rest of the agreement remains valid.
• Amendments: Explain that either party can amend the NDA if they acquire a written agreement with both parties’ signatures.
• Jurisdiction: The jurisdiction clause establishes which state’s laws govern the NDA. Suppose confidential information is leaked or inappropriately used by one party, and a lawsuit ensues. In that case, the laws of the agreed-upon state will apply, and any trials or hearings will occur there.
• Signatures: Your NDA needs to include the signatures of all parties and their representatives. Representatives are other people (i.e., directors, officers, employees, agents, or advisors) who may share, receive, or protect the information in pursuit of the transaction specified in the NDA.

How to Write an NDA?

Step 1 – Introduction

• Parties: Clearly identify the disclosing party and the receiving party.
• Purpose: Briefly state the purpose of the NDA, such as protecting confidential information related to [specific area, e.g., business plans, product development].

Step 2 – Confidential Information

• Definition: Clearly define what constitutes confidential information, including specific examples or categories.

Step 3 – Exclusions

• Publicly Known: Exclude information that is already publicly known or becomes publicly known through no fault of the receiving party.
• Independently Developed: Exclude information that the receiving party independently developed without using the disclosing party’s confidential information.

Step 4 – Obligations of the Receiving Party

• Confidentiality: Require the receiving party to maintain the confidentiality of the disclosed information.
• Use Restrictions: Specify how the receiving party can use the confidential information, such as for the sole purpose of [specific purpose].
• Disclosure Restrictions: Outline circumstances under which the receiving party may disclose confidential information, such as with written consent from the disclosing party.
• Return of Materials: Require the return or destruction of all confidential materials upon termination of the agreement.

Step 5 – Duration of the Agreement

• Term: Specify the duration of the agreement, such as a fixed term or until the confidential information becomes publicly known.
• Termination: Outline how the agreement can be terminated, such as upon written notice from either party.

Step 6 – Governing Law and Jurisdiction

• Governing Law: Specify the law that governs the agreement.
• Jurisdiction: Specify the jurisdiction in which disputes arising under the agreement will be resolved.

Step 7 – Dispute Resolution

• Negotiation: Require the parties to attempt to resolve disputes through negotiation or mediation.
• Arbitration: If negotiation or mediation fails, specify that disputes will be resolved through binding arbitration.

Step 8 – Indemnification

• Breach: Require one party to indemnify the other for losses or damages arising from a breach of the agreement.

Step 9 – Entire Agreement

• Integration: State that the written agreement constitutes the entire agreement between the parties and supersedes all prior or contemporaneous communications.

Step 10 – Severability

• Invalid Provisions: Specify that if any provision of the agreement is found to be invalid, the remaining provisions shall remain in full force and effect.

Step 11 – Notices

• Address: Specify the addresses to which notices should be sent.

Step 12 – Signatures

• Execution: Provide a space for the parties to sign and date the agreement.

Sample Non-Disclosure Agreement

Download a free non-disclosure agreement template in PDF or Word format below:

DOWNLOAD PDF

DOWNLOAD MS WORD

Resources

• Federal Speak Out Act (S.4524): The Speak Out Act prohibits NDAs and non-disparagement clauses from silencing employees regarding sexual harassment or assault in the workplace. It allows victims to speak out, even if they signed agreements, promoting transparency and accountability.
• Uniform Trade Secrets Act (UTSA): The UTSA provides legal protection for trade secrets by defining them and offering remedies for misappropriation. It promotes uniformity across states and safeguards confidential business information essential for competitive advantage.