Create A Non-Disclosure Agreement (NDA) with LegalZone

Generate a Non-Disclosure Agreement (NDA) with LegalZone

What Is a Non-Disclosure Agreement?

Also known as a confidentiality agreement, a non-disclosure agreement (NDA) is a contract between two parties that allows for the transfer of information from a disclosing party to a receiving party. The signed contract prevents the information from being shared with a third party.

As the disclosing party, an NDA protects your business secrets from being leaked and allows you to take legal action if the receiving party infringes on the agreement.

By signing an NDA, the receiving party additionally agrees that they will not duplicate the information shared without the discloser’s permission. The NDA allows the owner of the information to take legal action against the recipient if they start a carbon copy of the owner’s business.

What Can I Use a Non-Disclosure Agreement For?

Although they sometimes get a bad reputation for covering up the mistreatment of employees, NDAs were created to help businesses protect trade secrets that set them apart from their competitors.

If a business owner doesn’t want certain information leaked to the general public (especially competitors in the industry), they can use an NDA to ensure their employees don’t share it.

What Is Considered Confidential Information?

Confidential information generally covered by an NDA includes:

  • Business records or plans
  • Financial data
  • Original research
  • Inventions and Product Ideas
  • Recipes
  • Contract details
  • Partner lists
  • Pricing structure
  • Technical data and designs

Information that can NOT be included in an NDA consists of:

  • Information that is already public knowledge
  • Information provided by a third-party
  • Information developed by the recipient
  • Information discovered by the recipient
  • Information the owner already permitted the recipient to disclose
  • Information that both parties previously agreed was disclosable in writing

What Is Included in a Non-Disclosure Agreement?

Your NDA should begin with establishing who the disclosing party is and who the receiving party is. You’ll also clarify whether each entity is entering into the contract as a “business” or an “individual.”

The next section of the contract will establish what information is to be protected. Whether it’s a blueprint, a documentary script, a merger, or anything in between, the details outlined in the NDA need to be specific enough to hold up in court in the event of a breached contract.

You’ll also cover exceptions to the agreement in which it’s permissible for the recipient to share the information. Exceptions can range from “the information becomes public” to “the recipient is subpoenaed and asked to testify about the agreement in a court of law.”

After exceptions, you’ll outline the non-disclosure obligations of the recipient. This section takes up most of the agreement.  All NDAs will include a broad strokes clause that states the recipient cannot share the information with a third party. Other common NDA clauses include:

  • Non-Disclosure of Transaction: the recipient agrees not to share that information was shared or that an agreement took place
  • Non-Solicitation: either party asks that the other doesn’t attempt to use the information to impact their business proceedings
  • Non-Compete: the parties agree not to engage in any business activities that are in direct competition with each other (sometimes a non-compete agreement is drafted as a separate document)
  • Non-Circumvention: if the disclosed information is business contacts, the recipient agrees not to go around the disclosing party to do business with the contacts

Your NDA will also specify how long the agreement will last. The contract will end when the agreement expires, the transaction is completed, or after a time period. The termination date or time should be explicitly written in the contract.

Before signing the documents, you’ll establish which state laws govern the NDA. If there is a breach of contract, the trial will take place in this state. It’s essential to cover the state laws regarding NDAs before drafting your own.

At the very end, both parties will sign along with representatives for each party.

What’s the Difference Between a One-Way (Unilateral) NDA and a Mutual (Bilateral) NDA?

A one-way or unilateral NDA protects confidential information given from one party to the other. A discloser tells the recipient the information, and the recipient must keep it secret.

A mutual or bilateral NDA protects confidential information shared by both parties. Two businesses decide to share contacts with each other, and both parties must keep the other side’s information secret.

Create Your Non-Disclosure Agreement with LegalZone

All NDAs will look a little different depending on the nature of the information disclosed. If you have any questions about creating an NDA, one  of our LegalZone customer service specialists will be happy to assist you.

If you’re ready to begin creating your NDA, you can put  one together within minutes with our easy and affordable platform.