What Is Non-Disclosure Agreement?
A non-disclosure agreement (NDA) is a legally binding contract between two or more parties that establishes a confidential relationship, obligating the receiving party to keep shared information secret and not use it for unauthorised purposes.
NDAs are one of the most common legal tools in business. They are used before sharing sensitive information with potential partners, investors, employees, contractors, or acquirers. The agreement defines what constitutes confidential information, the obligations of the receiving party, the duration of the confidentiality obligation, and the remedies for breach. There are three main types of NDAs: unilateral (one party shares, the other keeps silent), mutual (both parties share confidential information), and multilateral (multiple parties are involved). Mutual NDAs are standard in business negotiations where both sides will be sharing sensitive material. Key clauses in an effective NDA include the definition of confidential information, exclusions (information already public, independently developed, or legally required to disclose), the term of the agreement, permitted disclosures (e.g., to advisors under similar obligations), and remedies for breach including injunctive relief and damages.
Why It Matters
NDAs are a first line of defence when sharing confidential information, but they are only as strong as your ability to enforce them. Having an NDA in place is one of the 'reasonable measures' courts look for when assessing trade secret protection. However, NDAs alone are insufficient — they must be part of a broader information security strategy.
How This Connects to IP Protection
immut strengthens NDA-based protection by providing timestamped proof of exactly what information existed before it was shared. If a dispute arises, you can demonstrate precisely what you disclosed and when, making it easier to prove breach. The blockchain timestamp also establishes that the information predated the sharing, reinforcing your ownership claim.
Common Mistakes to Avoid
An NDA makes information sharing completely safe: An NDA provides legal recourse if information is misused, but it cannot prevent someone from sharing your secrets. Enforcement requires litigation, which is expensive and uncertain. An NDA is a deterrent and a legal tool, not a technical barrier.
All NDAs are the same: NDA quality varies enormously. Poorly drafted NDAs with vague definitions of confidential information, missing exclusion clauses, or unenforceable terms can be worthless in court. Having a well-drafted NDA tailored to the specific situation is essential.
NDAs last forever: Most NDAs have a defined term, typically two to five years. After the term expires, the confidentiality obligation ends unless otherwise specified. Some NDAs include provisions for indefinite protection of trade secrets, but the general confidentiality obligations usually have a sunset clause.
Frequently Asked Questions
When should I use an NDA?
Use an NDA before sharing confidential information with potential business partners, investors, employees, contractors, or any third party. Common situations include investor pitches, partnership discussions, hiring processes, outsourcing projects, and due diligence for mergers or acquisitions.
Can an NDA be enforced across different countries?
Enforcement depends on the governing law clause in the NDA and the jurisdiction where you seek to enforce it. International NDAs should specify the governing law and dispute resolution mechanism. Courts in most developed countries will recognise and enforce well-drafted NDAs, though practical enforcement across borders can be complex and costly.
What happens if someone breaks an NDA?
The aggrieved party can seek legal remedies including monetary damages (compensatory and sometimes punitive), injunctive relief (a court order to stop further disclosure), and in some cases, account of profits. However, enforcing an NDA requires proving the breach and quantifying the damage, which can be challenging.
Protect Your Intellectual Property Today
Whether you are navigating non-disclosure agreement or building a broader IP strategy, immut gives you instant blockchain-verified proof of your innovations — no lawyers, no delays.