Businesses often possess sensitive information that gives them a competitive edge. This information is worth protecting. If it’s leaked, it could damage the business’s bottom line, competitive advantage, or reputation. That’s why it’s vital companies protect their secrets with NDAs.
What does NDA mean? It stands for ” non-disclosure agreement .” NDAs are used whenever an organization needs to share confidential information with another party. This can include hiring new employees or entering a new business partnership.
What is an NDA contract? Keep reading to learn everything you need to know.
What Is a Non-Disclosure Agreement (NDA)?
An NDA is a legally binding confidentiality agreement, or non-disclosure agreement, that requires that one or both signing parties do not disclose confidential information to other sources.
What does ” do not disclose” mean? It means that the signer can’t share or allow the information to be shared with anyone who doesn’t already know it.
Confidential items that an NDA can cover include:
- proprietary systems (like in-house software)
- internal data (like financial reports or business relationships)
- trade secrets (like food recipes)
If you breach an NDA, you could face serious legal consequences. Pay special attention to the terms before you sign an NDA.
There’s no legal distinction between a confidentiality agreement and an NDA agreement. The term used for a contract depends on where you live and the preferences of the parties involved.
How Does a Non-Disclosure Agreement Work?
Non-disclosure agreements work by legally binding two or more parties to specific confidentiality obligations. The NDA contract lists the confidential information that the receiving party must keep secret and lays out the terms and conditions that both parties must follow.
An NDA will also specify how long the information must be kept secret. Some NDAs can last indefinitely, requiring the signer to keep the secret forever.
Many NDAs will also include a non-disclosure clause that explains the penalties for breaching the contract. These penalties may be specific monetary damages or even criminal charges.
How to Send a Non-Disclosure Agreement
NDA templates can come in many formats. However, the best formats are PDF or printed documents. Both make sending NDAs easy. Signing an NDA means that the contract is legally binding, so it’s critical to send NDAs in a format that can’t be changed after it’s received.
If you want to write or edit a non-disclosure agreement template, Word is a great solution, since documents created in this format can be printed or converted to PDF easily. You can download the Legal Templates NDA template here to edit it and print or convert it to your preferred format.
Do I Need to Write an NDA? What Happens if I Don’t?
You never need to write an NDA, but it’s frequently a good idea. Whenever you’re preparing to share sensitive information with a new business or person, the NDA protects your company. Anyone who breaks the NDA knows they will face legal consequences, so there’s significantly less risk they will leak your information.
If you don’t learn how to create NDAs, you face problems. Without an NDA, you have no basis for taking legal action if someone reveals confidential data. You can’t prove that the other person promised to keep the information secret or that they agreed to face penalties otherwise. Basically, without an NDA, your company can lose control of sensitive or valuable information and have no way to recover.
When Is a Non-Disclosure Agreement Most Commonly Used?
There are several everyday situations where NDAs are used. A business will put together a template for NDAs when seeking new investors, looking for business partners, securing new clients, or hiring new employees.
Potential Problems With an NDA
The biggest potential problems with NDA templates lead to the same issue: They make the contract unenforceable. If a non-disclosure agreement template isn’t enforceable, it’s like you don’t have an agreement at all.
Reasons an NDA agreement template may not be enforceable include:
- The parties aren’t named correctly.
- The definition of confidential information is unclear or nonspecific.
- The scope of the NDA template is unreasonable.
- The confidential information is public domain or otherwise available to the signer already.
- The NDA wasn’t signed by a representative with sufficient authority.
How Much Does It Cost to Produce a Non-Disclosure Agreement?
It costs nothing to type up a template of a non-disclosure agreement by yourself, and a downloadable template for NDAs from Legal Templates is free.
Where to Get an NDA
Protecting your confidential information is essential to keeping your business safe. Get your free non-disclosure agreement template to get started.
What happens if you break an NDA?
If you breach your NDA contract, you will usually be responsible for monetary damages to the organization whose information you leaked. These damages are typically set as the amount of money the company lost because of the leak. You may even face criminal penalties if the NDA was related to government activity.
Is an NDA legally binding?
Yes, NDAs are legally binding once both parties sign them. A signed NDA is only considered not legally binding if it’s not enforceable for some reason.
Is it safe to sign an NDA?
As long as you read and agree to the terms of an NDA, then it’s safe to sign. The only thing NDA agreements cover is keeping particular confidential information secret. Just make sure that the non-disclosure agreement doesn’t include clauses that cover things other than confidentiality.
Is an NDA a contract?
Yes, an NDA is a contract where two or more parties agree to specific confidentiality terms. NDA stands for non-disclosure agreement, and “agreement” is another word for “contract.”
What does an NDA mean in shipping?
Sometimes, a shipping NDA is a non-disclosure agreement, meaning that a shipping company is bound to keep certain information confidential. More commonly, NDA in shipping stands for “next day air,” meaning that the shipping company will deliver an item by the next day with the help of a plane.
If you’re ready to write your own NDA, you can download the Legal Templates NDA template and create your contract immediately.
If you want more information about non-disclosure agreements, you can check out our extra resources below:
- Non-Disclosure Agreement vs. Confidentiality Agreement: What’s the Difference?
- Non-Compete vs. Non-Disclosure Agreement: What’s the Difference?
- Information you can and can’t protect with a Non-Disclosure Agreement
- What to do if someone breaks your NDA
- Should you sign that NDA? Here’s why (and why not) to sign
- Non-Compete vs Non-Disclosure Agreement: What’s the Difference?
- Non-Disclosure Agreement vs. Confidentiality Agreement: What’s the Difference