Non Disclosure Agreement NDA


A good Non-Disclosure Agreement (NDA) is essential for protecting confidential information and trade secrets that may be disclosed between parties, particularly in business and legal contexts.

NDAs are broadly classified into three types:

Unilateral NDA: In this type of agreement, only one party is prohibited from disclosing confidential information. Typically, this agreement is used within organizations, where employees are required to sign NDAs to prevent them from divulging company secrets to outsiders. Confidential information is defined as data that, if disclosed to the public or competitors, could harm the company. Unilateral NDAs are commonly employed by organizations to safeguard proprietary information generated by employees.

Bilateral NDA (Mutual NDA): A bilateral NDA, also known as a Mutual NDA, restricts both parties involved from using the information or material provided to them. This type of agreement is favored by businesses entering joint ventures that involve sharing confidential information and proprietary details. Bilateral NDAs facilitate easy dispute resolution between parties in agreement.

Multilateral NDA: Unlike the above agreements involving two parties, a Multilateral NDA involves more than two parties. Under this agreement, one party shares confidential information with other parties, expecting them not to disclose it further to any party not included in the contract. Multilateral NDAs are used when multiple entities need to exchange sensitive information while ensuring its confidentiality. 

Additionally, there are other specific types of NDAs that can be used in certain contexts, such as:

  1. Employee NDA: This type of NDA is specifically designed to protect confidential information that an employee may come across during their employment. It can also include provisions related to non-solicitation and non-competition.
  2. Vendor NDA: This type of NDA is used to protect confidential information that may be disclosed to a vendor or supplier in the course of doing business. It can include provisions related to the use and protection of the confidential information and limitations on the vendor’s use and disclosure of the information.
  3. Investor NDA: This type of NDA is used to protect confidential information that may be disclosed to potential investors or during fundraising rounds. It can include provisions related to the use and protection of the confidential information and limitations on the investor’s use and disclosure of the information.
  4. Business Sale NDA: This type of NDA is used in the context of a potential sale or acquisition of a business, to protect confidential information that may be disclosed during due diligence or negotiations.

Overall, a good NDA is crucial for safeguarding confidential information, protecting businesses from legal disputes and reputational damage, and establishing trust and credibility with partners and stakeholders.

Situations Where NDA is Needed

Presenting an Invention or Business Idea: Entrepreneurs and inventors often need to pitch their innovative business ideas or inventions to potential partners, investors, or distributors. However, there is a risk of these parties stealing the idea and exploiting it for their own benefit. By entering into an NDA before disclosing the idea, the entrepreneur or inventor can prevent the unauthorized use or disclosure of their intellectual property, minimizing the risk of idea theft and safeguarding their interests.

Sharing Financial and Business Information: When selling a business or seeking investment, the seller may need to share sensitive financial, marketing, and operational information with potential buyers or investors. An NDA ensures that the disclosed information remains confidential and is not used for any purpose other than evaluating the potential transaction. This protects the seller’s business interests and prevents competitors from gaining access to proprietary information.

Using Services from Other Companies or Individuals: Businesses often engage third-party service providers who may have access to confidential information while delivering their services. Similarly, employees may have access to sensitive information during the course of their employment. In such cases, NDAs help to ensure that the service provider or employee maintains the confidentiality of the information and does not misuse it for personal gain or disclose it to unauthorized parties.

In India, NDAs are widely used in various business transactions such as mergers, acquisitions, and outsourcing arrangements. The legal framework governing NDAs in India is primarily based on the Indian Contract Act of 1872, which establishes the principles of contract law. Additionally, NDAs may be subject to stamp duty and registration requirements under the Registration Act of 1908 to ensure their legality and enforceability.

Overall, NDAs play a crucial role in protecting confidential information, fostering trust between parties, and mitigating the risks associated with sharing sensitive data in business transactions.

Drafting a Non-Disclosure Agreement (NDA) involves careful consideration of the specific requirements and circumstances of the parties involved. While there is no standard format for an NDA, certain key elements should be included to ensure clarity and effectiveness.

Benefits of a Non-Disclosure Agreement

The benefits of a well-crafted Non-Disclosure Agreement (NDA) can include the following:

  1. Protection of confidential information: The primary benefit of an NDA is that it can help protect confidential information from being disclosed to unauthorized parties. This can include trade secrets, proprietary information, financial data, or any other sensitive information that should be kept confidential.
  2. Legal protection: An NDA can provide legal protection for the disclosing party in the event that the recipient breaches the agreement by disclosing confidential information. This can include monetary damages and injunctive relief.
  3. Increased trust: An NDA can help build trust between parties by demonstrating a commitment to protecting confidential information. This can be especially important in business relationships where sensitive information is shared.
  4. Competitive advantage: By protecting trade secrets and other confidential information, an NDA can help businesses maintain a competitive advantage in their industry.
  5. Better negotiation position: An NDA can also give parties a stronger negotiating position, particularly in the context of mergers and acquisitions, as it helps to ensure that sensitive information is protected during negotiations.

Overall, a well-drafted NDA can provide valuable protection and peace of mind for parties who need to share confidential information. It can help establish trust, protect trade secrets, and provide legal recourse in the event of a breach.

What Are the Key Elements of Non-disclosure Agreement?

A valid non disclosure agreement should include the following key provisions-

The Parties

This section will mention if the nondisclosure agreement is a unilateral, bilateral, or multilateral one. The details of the party/parties (names, addresses, etc) involved should be mentioned in this part.

Term of the Agreement

The non disclosure agreement template must mention the date of execution of the agreement and the duration of the existence of the same. It should also mention if the rules and obligations related to disclosure of information will be applicable after the expiry of the nondisclosure agreement or not.

Confidential Information

The non disclosure agreement format must specify what information is to be kept in the ‘confidential’ category or to be protected.

Disclosure of Confidentiality

This section of the non-disclosure agreement specifies the intentions for which the confidential data/information will be used. It will also specify with whom such information can be shared.

Dispute Resolution

The non disclosure agreement must mention the remedial measures the parties will resort to, to resolve disputes, if any. It will include alternative forms of dispute resolution they may choose to employ, such as arbitration.

Guide for Drafting a NDA

Identification of the Parties: Begin by clearly identifying the names and designations of the parties involved in the agreement. Typically, the disclosing party (the party sharing confidential information) and the recipient party (the party receiving the information) are identified. If there are third-party recipients who may also have access to the confidential information, their details should also be mentioned.

For example: This Non-Disclosure Agreement (‘Agreement’) is entered into on [Date] by and between [Name of Disclosing Party], with its principal place of business at [Address], and [Name of Recipient Party], with its principal place of business at [Address].”

Definition of Confidential Information: Clearly define what constitutes confidential information under the agreement. This may include proprietary business information, trade secrets, intellectual property, financial data, customer lists, and any other sensitive information that the disclosing party wishes to protect from unauthorized disclosure or use.

For example: “Confidential Information shall include, but is not limited to, [list specific types of information such as business plans, financial records, product designs, etc.].”

Purpose of Disclosure: Specify the purpose for which the confidential information is being disclosed and the intended use by the recipient party. This helps to establish the context of the agreement and ensures that the recipient understands the limitations on their use of the information.

For example: “The Confidential Information is being disclosed solely for the purpose of [describe the purpose such as evaluating a potential business partnership, investment opportunity, etc.].”

Obligations of the Recipient: Clearly outline the obligations and responsibilities of the recipient party regarding the confidential information. This may include obligations to maintain confidentiality, restrict access to authorized personnel, use the information only for the specified purpose, and take measures to prevent unauthorized disclosure or use.

For example: “Recipient agrees to maintain the confidentiality of the Confidential Information and to use it solely for the purpose specified herein. Recipient shall not disclose the Confidential Information to any third party without the prior written consent of the Disclosing Party.”

Duration of Confidentiality: Specify the duration for which the confidentiality obligations will remain in effect. This may be for a specific period of time or until certain conditions are met, such as the termination of the agreement or the expiration of a specified term.

For example: “The obligations of confidentiality under this Agreement shall remain in effect for a period of [insert duration] from the date of disclosure of the Confidential Information.”

Exceptions to Confidentiality: Include any exceptions to the confidentiality obligations, such as information that is already in the public domain, independently developed by the recipient, or disclosed with the prior written consent of the disclosing party.

For example: “The obligations of confidentiality under this Agreement shall not apply to any information that: (a) is or becomes publicly available through no fault of the Recipient; (b) was rightfully in the possession of the Recipient prior to its disclosure by the Disclosing Party; (c) is independently developed by the Recipient without reference to the Confidential Information; or (d) is disclosed with the prior written consent of the Disclosing Party.”

Remedies for Breach: Specify the remedies or consequences for breach of the confidentiality obligations. This may include injunctive relief, monetary damages, or other legal remedies available under applicable law.

For example: “In the event of a breach of this Agreement, the non-breaching party shall be entitled to seek injunctive relief and/or pursue any other legal remedies available under applicable law.”

Governing Law and Jurisdiction: Identify the governing law and jurisdiction that will apply to the interpretation and enforcement of the agreement. This ensures clarity and predictability in the event of disputes or legal proceedings.

For example: “This Agreement shall be governed by and construed in accordance with the laws of [insert governing law], without regard to its conflicts of law principles. Any disputes arising under or related to this Agreement shall be subject to the exclusive jurisdiction of the courts of [insert jurisdiction].”

Miscellaneous Provisions: Include any other miscellaneous provisions that are relevant to the agreement, such as assignment, waiver, entire agreement, severability, and amendments.

For example: “This Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, relating to such subject matter.”

Execution: Provide space for the parties to sign and date the agreement, indicating their acceptance and agreement to be bound by its terms.

For example: “IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.”

Consultation with Legal Counsel: It’s advisable for both parties to seek legal advice before signing the NDA to ensure that their interests are adequately protected and that the agreement complies with relevant laws and regulations.

It’s important to remember that every NDA is unique, and the specific details of the agreement will vary depending on the context and needs of the parties involved. Working with a legal professional can help ensure that your NDA is tailored to your specific needs and provides adequate protection for your confidential information.

Clause on Liabilities and Responsibilities: The NDA should include a separate clause that outlines the obligations and responsibilities of each party regarding the confidentiality of the information shared. This clause should specify the duties of the disclosing party in safeguarding the confidential information and the obligations of the recipient party in maintaining confidentiality. For example: “Each party agrees to take all necessary measures to ensure the confidentiality of the information disclosed under this Agreement and to prevent its unauthorized use or disclosure.”

Purpose of Use Clause: The agreement should contain a clause that clearly specifies the intended purpose for which the confidential information is being shared and outlines who is authorized to access the information. This helps to establish the context of the agreement and ensures that the information is used only for the specified purposes. For example: “The confidential information disclosed under this Agreement shall be used solely for the purpose of [describe the purpose such as evaluating a potential business partnership, investment opportunity, etc.]. Access to the confidential information shall be limited to [list authorized individuals or parties].”

Steps to Maintain Confidentiality: A clause detailing the necessary steps to maintain the confidentiality of the information should be included. This may include provisions for securing physical and electronic copies of the information, restricting access to authorized personnel, implementing encryption or password protection measures, and establishing procedures for handling and storing confidential information. For example: “The parties agree to implement and maintain reasonable security measures to protect the confidentiality of the information disclosed under this Agreement. Such measures may include encryption, password protection, restricted access, and secure storage facilities.”

Definition of Confidential Information: This section of the agreement defines what types of information are considered confidential. While written information is straightforward to identify, oral disclosures can also be deemed confidential at the discretion of the disclosing party. It is advisable for the disclosing party to periodically provide written statements reaffirming the confidential nature of the information shared orally and specifying any exclusions from the list of confidential information.

For example: “Confidential information shall include, but is not limited to, all written documents, trade secrets, proprietary information, financial data, business plans, and any other information disclosed by one party to the other under this Agreement. Oral disclosures made by the disclosing party shall also be considered confidential if designated as such in writing within a reasonable timeframe.”

Including these clauses in the NDA, the parties can establish clear guidelines for maintaining the confidentiality of the information shared and ensure that their interests are adequately protected.

Requirements for an Non-Disclosure Agreement

Identification of the Parties: The NDA should clearly identify the parties involved in the agreement.

Definition of Confidential Information: The NDA should define the types of confidential information that are covered by the agreement.

Scope of the Agreement: The NDA should outline the terms of the contract, including how long the confidentiality obligation will last.

Exceptions to Confidentiality: Any exceptions to the confidentiality obligation, such as information that is already public knowledge, should be specified in the NDA.

Obligations of the Recipient: The NDA should outline the obligations of the recipient, including the duty to maintain confidentiality and restrictions on the use of confidential information.

Remedies for Breach: The NDA should specify the remedies that are available in the event of a breach of the agreement, such as injunctive relief or monetary damages.

Governing Law and Jurisdiction: The NDA should specify the governing law and jurisdiction that will apply in the event of a dispute.

What Is a Non Disclosure Agreement Template?

A confidentiality agreement between two or more parties is outlined in a Non Disclosure Agreement (NDA) template, a legal document. An NDA template can be used to protect confidential and proprietary information, trade secrets, and other sensitive data from being disclosed to unauthorised third parties. Here is a general template of the same.


This Non-Disclosure Agreement (hereinafter referred to as the ‘Agreement’) is made and entered into on [Date] (the ‘Effective Date’) by and between [Name of Disclosing Party] (the ‘Disclosing Party’), having its principal place of business at [Address], and [Name of Receiving Party] (the ‘Receiving Party’), having its principal place of business at [Address].

1. Purpose

The Disclosing Party is engaged in a business that involves the creation, development, and marketing of [Product/Service/Information]. The Disclosing Party agrees to disclose certain information to the Receiving Party for the sole purpose of [Purpose of Disclosure] because the Receiving Party requests it. This information is confidential and proprietary in nature.

2. Confidential Information

The term ‘Confidential Information’ in this agreement pertains to all information that is designated as ‘Confidential’ or which the receiving party is aware or has reason to believe is confidential, proprietary, or classified as a trade secret by the disclosing party. This includes any information that the disclosing party discloses to the receiving party through oral or written means, or by allowing the Receiving Party to inspect physical objects.

3. Non-Disclosure and Non-Use

Without the prior written consent of the disclosing party, the receiving party agrees to keep the confidential information in strict confidence and not to disclose, copy, or use any of the confidential information for any purpose other than the one for which it was disclosed. The Receiving Party shall implement reasonable physical, electronic, and procedural safeguards, among other measures, to ensure the confidentiality of the confidential Information.

4. Term and Termination

Unless one of the parties gives the other party written notice that they wish to terminate it earlier, this Agreement will be in effect for the duration of [Term]. Upon termination of this agreement, the receiving party is required to immediately return or destroy any confidential information that is under their possession or control. Additionally, the receiving party must provide written certification to the disclosing party confirming that all confidential Information has been returned or destroyed.

5. Remedies

It is acknowledged by both parties that if there is a breach of this agreement, the disclosing party may suffer irreparable harm, and monetary compensation may not be a sufficient remedy to address such harm. In order to enforce the terms of this agreement, the disclosing party shall be permitted to request injunctive relief without posting a bond, in addition to any other legal or equitable rights or remedies that may be available.

6. Governing Law and Jurisdiction

The laws of [State/Country] shall govern and interpret this agreement, disregarding any provisions concerning choice of law or conflicts of law. Any legal proceedings or actions that arise from or pertain to this agreement shall be conducted solely in the courts of [State/Country].

7. Entire Agreement

The parties’ entire understanding regarding the subject matter of this agreement is contained in this agreement, which supersedes all prior or current agreements or understandings, whether in writing or verbally. Except in writing and with the consent of both parties, this Agreement may not be changed or modified.

IN WITNESS WHEREOF, the parties have executed this agreement as of the effective date.

Disclosing Party: [Name]

By: ___________________________

[Name], [Title]

Receiving Party: [Name]

By: ___________________________

[Name], [Title]

What Happens If You Violate a Non Disclosure Agreement?

If you violate a Non Disclosure Agreement (NDA), you may face legal consequences, such as monetary damages or injunctive relief. The precise repercussions will vary depending on the conditions of the particular NDA and the type of violation.

In the event of a violation, NDAs typically contain provisions for monetary compensation and injunctive redress. Damages may include actual damages suffered by the disclosing party as a result of the breach, as well as any profits gained by the breaching party as a result of the breach. Injunctive relief may include court orders to stop the breaching party from continuing to disclose or use the confidential information, or to return any confidential information in their possession.

Information Protected With Non-Disclosure Agreement

The type of information that is protected under an NDA can vary depending on the context of the agreement, but generally includes:

Trade Secrets: Information that is valuable to a business or organization and is kept confidential to maintain a competitive advantage, such as manufacturing processes, formulas, or customer lists.

Business and Financial Information: Information about a company’s finances, sales figures, marketing plans, and other business-related information that is not publicly available.

Intellectual Property: Knowledge that should be kept private about patents, trademarks, copyrights, or other types of intellectual property.

Personal Information: Confidential information about individuals, such as personal identification information, health information, or other sensitive personal data.

Proprietary Software or Technology: Information related to proprietary software, technology, or inventions, including source code, algorithms, and designs.

Customer or Supplier Information: Information related to customers or suppliers, such as contact information, pricing information, or sales.

Precautions to be considered while Creating and Signing a Non-Disclosure Agreement

Accuracy and Clarity: Ensure that the information stated in the agreement is accurate and that the language used is clear and unambiguous. Ambiguity in the agreement can lead to misunderstandings or disputes in the future. Therefore, it’s essential to carefully draft each clause to accurately reflect the intentions of the parties.

Thorough Review: Before signing the agreement, both parties should thoroughly review its contents. It’s crucial to carefully examine each clause to understand the rights and obligations of each party. If there are any concerns or questions, they should be addressed and clarified before signing.

Explanation of Clauses: It’s important to explain each clause of the agreement to the parties involved to ensure mutual understanding and agreement. This helps to prevent any misunderstandings or conflicts arising from misinterpretation of the terms of the agreement.

Unnecessary Clauses: The agreement should only include clauses that are necessary and relevant to the purpose of the agreement. Unnecessary clauses or conflicting sentences should be avoided to maintain clarity and coherence in the document.

Inclusion of Expiry Date and Renewal Clause: The agreement should specify an expiry date, indicating the duration for which the confidentiality obligations will remain in effect. Additionally, it should include a clause addressing the renewal of the agreement if necessary. This ensures that both parties are aware of the duration of their confidentiality obligations and provides a mechanism for extending the agreement if needed.

Taking these precautions, parties can ensure that the Non-Disclosure Agreement is accurately drafted, clearly understood, and effectively safeguards their confidential information.

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Corporate Raasta Consulting can draft customized NDAs tailored to the specific needs and circumstances of the client’s business. This ensures that the agreement accurately reflects the client’s confidentiality requirements and adequately protects their sensitive information.

Beyond drafting and negotiating NDAs, Corporate Raasta Consulting can provide ongoing support and advice to clients on matters related to confidentiality, data protection, and compliance with legal requirements.

Overall, Corporate Raasta Consulting serves as a trusted partner for businesses seeking to safeguard their confidential information through effective Non-Disclosure Agreements, providing expert guidance, tailored solutions, and ongoing support to meet their unique needs.

  • An NDA is a legal contract between parties that outlines confidential material, knowledge, or information that the parties wish to share with each other for certain purposes but wish to restrict access to or by third parties.

  • Anyone who will have access to confidential information should sign the NDA. This could include employees, contractors, consultants, business partners, investors, etc.

  • An NDA should include details of the parties involved, the scope of the confidential information, the purpose for which the information is being shared, the duration of the agreement, any exclusions from confidentiality, and the consequences of breaching the agreement.

  • Yes, NDAs are generally enforceable if they meet the legal requirements of a contract, such as offer, acceptance, consideration, and mutual intent. However, the enforceability may vary depending on the jurisdiction and specific terms of the agreement.

  • The duration of an NDA depends on the terms negotiated by the parties. It can be for a specific period (e.g., one year, three years) or indefinite (e.g., until the information is no longer considered confidential).

Non Disclosure Agreement NDA