A Non-Disclosure Agreement (NDA) is a legally enforceable contract that establishes confidentiality between two parties—the owner of protected information and the recipient of that information. By signing an NDA, participants agree to protect confidential information shared with them by the other party. In addition to not divulging or releasing the information without consent, the recipient also agrees not to copy, modify, or make use of the information in any way that is not authorized by the owner.
What is an NDA (Non-Disclosure Agreement)?
What is the purpose of an NDA?
A signed NDA form can help you avoid a lot of problems as a business owner. Without a Non-Disclosure Agreement in place, your confidential information can be disclosed publicly or otherwise used by employees, vendors, clients, or anyone else that you share them with. A Non-Disclosure Agreement lets the recipients of your proprietary information know that you expect confidentiality and it authorizes you to take legal action if the contract is violated.
Confidential information typically can include items such as:
- Business records and plans
- Financial information
- Trade secrets and original research
- Inventions and product ideas
- Technical data or designs
- Contract details or partner lists
- Sales leads and customer or client details
- Pricing or discount structure
Confidential information generally does not include:
- Information that is already public knowledge
- Information lawfully received from a third-party
- Information that is independently developed or discovered by the recipient
- Information that the owner has already given the recipient consent to disclose
- Any other information that both parties agree in writing is not confidential
How do I write a Non-Disclosure Agreement?
You can customize the Rocket Lawyer NDA template in minutes. Here's what should be included in an NDA:
Parties to the agreement
- The owner of proprietary information and the recipient
- Either party can be an individual or a company
Confidential information details
- The definition for what is considered confidential information
- The reason why the confidential information is being shared
- Non-circumvention requirements (which protect an owner from being bypassed in a business transaction)
- Timeframe of confidentiality
As a Rocket Lawyer Premium member, you can access, edit, and copy your NDA template using any device. Your completed document can also be electronically signed or downloaded in PDF or Word format. If you make additional edits directly to the document, it is recommended that you have a lawyer review your changes.
Is an NDA legally binding?
While a properly executed NDA form is usually enforceable, there are a few key considerations to keep in mind if you want to take a dispute to court:
- Does your state have protections against unreasonable or overly broad scopes?
- Was the information shared accidentally (e.g. overheard, hacked or otherwise stolen?)
- Is the information well-known or easily findable?
- Can the process or product easily be developed without access to your information?
- Do you have proof that the recipient of the information was the true source of the leak?
- Can you prove that the release of information actually caused monetary or other types of damage to your company?
Even the most simple confidentiality agreement can benefit from attorney review. If you have questions about the enforceability of your Non-Disclosure Agreement, ask a lawyer.
How long should an NDA last?
Generally, the time period is limited to as long as the confidential information is considered useful. Depending on the nature of the information that was exchanged, a shorter or reasonable amount of time, like one year, may be more legally enforceable. However, information like trade secrets may benefit from being kept confidential for an indefinite amount of time.
What happens if you break a Non-Disclosure Agreement?
Breaking an NDA is the same as breaking any other contract, however there are certain legal exceptions. Generally speaking, you may legally break a Non-Disclosure Agreement if there is a misrepresentation of material fact (hiding or fabricating important details in the contract) or if illegal activity is involved. If you are considering breaking any legal contract, it is usually best to talk to a lawyer beforehand.