Protect confidential information from being shared with a complete and comprehensive NDA. Start your own NDA document today with LawDistrict’s non-disclosure agreement template form.
Last Update January 5th, 2023
- What is a Non Disclosure Agreement
- What is the Purpose of an NDA
- Types of NDA
- Violation of an NDA
- How to Write a Non-Disclosure Agreement (NDA)
- NDA Law by State
- Non-Disclosure Agreement (NDA) Sample
- NDA vs Non-Compete
- FAQs About Non-Disclosure Agreements
Download our professional examples
What is a Non Disclosure Agreement
An NDA (non-disclosure agreement) is a legal agreement between two parties on the use of confidential information. There are two main parties who are usually involved with an NDA agreement, ‘the owner’ of the data and ‘the recipient’.
A generic NDA will require the recipient of the information to keep it secret and prevent the data from being shared. It not only allows the owner to restrict the recipient from disclosing the information but also obliges the receiving party to ensure that it is properly protected and safe from accidental leaks.
An NDA can also be known as a:
Confidentiality Agreement (CA)
Confidential Disclosure Agreement (CDA)
Proprietary Information Agreement (PIA)
Secrecy Agreement (SA)
Note: You can find out more about what an NDA is and what it involves, in our NDA definition.
What is the Purpose of an NDA
There are a few purposes of these essential legal documents. The importance of a Non-Disclosure Agreement is that it permits the use of one or more types of confidential information under a number of conditions.
Most commonly these stipulations will appear in an employee non-disclosure agreement. This means that company staff is permitted to access the information to perform their work duties and that they agree not to share the private information publicly.
However, NDAs can be used more broadly than that across a number of different circumstances. These may include:
Sharing private information about the workings of a business with potential investors
Providing data and sensitive user information to contractors and consultants to help improve a businesses performance
Disclosing information privately to journalists prior to a product launch or major announcement (often known as a press embargo)
Allowing lab workers to parse data about patients and participants in trials
Sharing information with a publicist or publicity agent in confidence
Be aware, however, an NDA cannot be used to protect against information that is already publicly available. It also cannot prevent the disclosure of information not explicitly detailed by the document and data that is uncovered independently of the owner’s distribution.
Types of NDA
NDAs will often vary depending on the necessities of the business or individual. Another factor is that data could be exchanged between all parties involved, rather than just simply passed from owner to recipient. Whichever case applies, this will affect the type of NDA you end up creating.
There are three main types of NDAs that are used by individuals and businesses. These include:
Unilateral: In most cases, an NDA will be unilateral. This simply means that there is a one-way exchange of information from the owner to the recipient.
Bilateral: This is a type of mutual NDA, meaning that the information exchange moves both ways between both the parties.
Multilateral: This rarer form of NDA, allows confidential information to be securely disclosed to three or more parties. There can either be one or multiple owners sharing data in this case.
Violation of an NDA
A violation of an NDA occurs when one of the parties leaks information that is meant to stay confidential.
There are certain actions that you can take to stop this behavior.
The party that had their information leaked should create a Cease and Desist order and send it to the other party.
This doesn’t necessarily mean that there will be any legal action. However, it prevents the other party from continuing to leak information.
If the person that leaked the information did so in more than 1 state, they could be charged in federal court. If that is not the case, then that party must face trial only in the state court.
You could also be awarded up to 5 million dollars or 3 times what was taken from you if the other party committed theft.
How to Write a Non-Disclosure Agreement (NDA)
Writing your own NDA form is not as tricky a process as it may appear. However, you need to make sure that you include all the details necessary to make sure that your confidential information is properly protected.
To function as intended, a confidentiality agreement will need to include the following critical information:
The names of all parties in the agreement
Whether the parties are companies or individuals
Which state’s laws will preside over the NDA (usually a resident state of one of the parties)
What kind(s) of confidential information is being shared
The reason for the distribution of this data
The amount of time the agreement will apply for (the term of disclosure)
A statement defining how the data may be used appropriately
Any exclusions to the agreement
As noted above, one of the most important details an NDA needs to clearly define is what kind of confidential information is being shared and legally binds the recipient to its protection. This kind of data could involve:
Product ideas or inventions
Private user data
Business plans and records
Sales leads and customer data
Follow these instructions to create a well-written Non-Disclosure Agreement.
Disclosing and Parties
The beginning of your document establishes who the parties are in the agreement. In a unilateral agreement, there are 2 types of parties:
Disclosing party: The one sharing information
Receiving party: The one who receives the information
In a mutual agreement, both are disclosing and receiving. This part gives the information of the person or business involved.
This part explains that both parties want to begin a possible business opportunity of mutual interest. The opportunity may involve confidential information regarding products or data, and the receiving party cannot share this information.
The agreement must have the signatures of the parties and representatives. With the signatures, it becomes a legally binding document.
Using a pre-prepared NDA template can help speed up the process of writing your own document. This can help by laying out the key elements you’ll need to successfully protect your confidential information by allowing you to add the specific details of your case to each essential section.
LawDistrict’s step-by-step form can help you through each part of the process. It will help you address the most important considerations on your document and create a professional and useable printable PDF of your NDA.
NDA Law by State
Any violation of a trade secret that is done in more than 1 state can be brought to trial in federal court.
If it is done in only a single state, you must check the laws of that state before proceeding with the legal process.
Refer to the table below to review the trade secrets act of your state.
Non-Disclosure Agreement (NDA) Sample
Before you start writing your own in-depth confidentiality agreement, it is useful to have a good idea of how your document will look. View our standard sample NDA template below to see how your text should appear once completed.
NDA vs Non-Compete
A Non-Compete Agreement is a document that’s similar to an NDA. They complete a similar function, but they are not identical.
Here are the differences and similarity between the 2 agreements.
|Non-Compete Agreement||Non-Disclosure Agreement|
|An employee cannot work for a competitor||Employees are able to work for competitors|
|Employees cannot give proprietary information||Employees cannot give proprietary information|
|Restricted in numerous states||Not restricted in any part of the country|
|Confined to employment||Not confined to any industry|
Employers can use both of these agreements to their advantage to prevent important information from getting out.
FAQs About Non-Disclosure Agreements
If you’re still unsure regarding some of the details you’ll need to know before creating a comprehensive and legally water-tight NDA, don’t panic. We have found the answers to some of the most frequently asked questions to help make the process a little clearer.
Read on below to learn more about the ins and outs of these kinds of legal documents.
Is an NDA legally binding?
Yes, when you write an NDA and have it signed by both parties it is legally binding as of that moment (or the dates specified when the agreement is to come into effect). At that point onwards the recipient is legally liable for the protection of any and all of the confidential information that is shared with them by the owner under the form’s terms.
What Happens If You Break an NDA?
If you happen to break an NDA you could be sued by the owner. However, in order to do so, the owner must be able to demonstrate that you broke the terms written in the NDA form. They will need to provide evidence of who the information has been shared with, when the breach of confidentiality happened, and how it was carried out.
How Long Should an NDA Last?
An NDA can last for as long or as short a time as is needed to ensure the protection of your confidential information. However, in most cases, the duration of an NDA will last between 1-5 years.
When you write your own document this will normally be outlined in the non-disclosure agreement form. When filling in LawDistrict’s online NDA template you will be prompted to specify the terms of disclosure, which will regulate how long the agreement will run for.