What Is an NDA? A Plain-English Guide for the Person Signing

An NDA (non-disclosure agreement) is a contract in which one or both sides promise to keep certain information secret and to use it only for an agreed purpose. It is usually short, it usually arrives before anything else is signed, and it often keeps applying after the project, the job or the talks are over.

This page explains what an NDA is for and how its parts fit together. For the clauses that most often cause trouble, see what to watch for in an NDA.

What is an NDA for?

An NDA lets two sides talk before they trust each other. A company can show a freelancer its product plans, a buyer can look at a small business's accounts, or an employer can give a new hire access to customer lists, and the NDA sets the rules for what the other side may do with what it learned.

It does three jobs at once:

• It names the information. The protection usually reaches what falls inside the definition.
• It limits use. The information may be used for one stated purpose, such as "evaluating a possible partnership," and nothing else.
• It limits sharing. The information may go only to the people the NDA allows, such as named staff or advisers.

When will you be asked to sign one?

The NDA for employees is a different animal from the one-off NDA before a meeting — it is usually bundled with other promises about inventions and property. See NDAs for employees.

The parts of an NDA, in the order you will usually meet them

Many NDAs follow a similar outline, even when the headings differ. Reading the parts in this order can make a dense page easier to follow.

1. Parties. Who is signing, and which of them is the "Disclosing Party" and the "Receiving Party." This usually decides whether the NDA is one-way or mutual, whatever the title says.
2. Purpose. The reason the information is being shared. A clear purpose usually limits what the receiving side may do with it.
3. Definition of confidential information. What the NDA treats as secret. Some NDAs cover only information marked "confidential"; others cover anything shared, including in conversation.
4. Exclusions. What the NDA usually leaves out, even if it was shared: information that is already public, that the recipient already knew, that it gets lawfully from someone else, or that it develops on its own.
5. Obligations. What the recipient promises to do: keep it secret, protect it with reasonable care, and use it only for the purpose.
6. Who else may see it. Employees, contractors or advisers who need it, usually on the condition that they are bound by similar duties.
7. Disclosure the law requires. What happens if a court or regulator orders the recipient to disclose — usually, notice to the other side first.
8. Term. How long the NDA lasts, and how long the duty of secrecy continues after it ends. These are often two different periods.
9. Return or destruction. What happens to documents and files when the talks end.
10. No license, no obligation. A statement that sharing information gives the recipient no right to it, and that neither side is committed to doing a deal.
11. Remedies, governing law and venue. What the disclosing side may ask a court to do, which law applies, and where a dispute would be heard.

Some NDAs add promises that have nothing to do with secrecy, such as not hiring the other side's staff or not working with its competitors. Those are covered in non-competes inside an NDA.

How often do these parts appear?

Not every NDA has all of these parts. FixMyContract counted how often research NDAs state each common clause, using the ContractNLI dataset: see Is this NDA clause normal? and, for the term, How long do NDAs last?.

What an NDA does not do

• Public information usually stays outside it. If something is already out in the open, the standard exclusions usually take it outside the NDA.
• It is usually not about ownership. An NDA usually covers use and sharing; who owns an idea or a piece of work is typically set elsewhere, for example in an IP assignment.
• It usually does not commit anyone to a deal. Many NDAs say so in writing.
• It is not always a separate document. Many service, employment and vendor contracts carry a confidentiality clause that does the same job inside the bigger contract.

Questions to answer before you sign

• Who is the receiving party — only you, or both of you?
• What is the stated purpose, and does it match what you will actually do with the information?
• Does the definition reach things said in meetings, or only marked documents?
• Are the standard exclusions there?
• When does the duty of secrecy end?
• Is there anything in the NDA that is not about secrecy?

Changing a term is covered in how to negotiate an NDA.

FAQ

Is an NDA the same as a confidentiality agreement? Usually, yes. "Non-disclosure agreement," "confidentiality agreement" and "confidential disclosure agreement" are common names for the same kind of contract. The text inside usually tells more than the label.

Does an NDA cover things said out loud? It depends on the definition. Some NDAs cover anything shared in any form; others cover spoken information only if it is confirmed in writing within a set time. The definition is where that difference shows.

Do both sides have to sign? Usually each side signs the same document. Some one-way NDAs are signed only by the receiving side; either way, the duties fall where the text puts them.

The NDA you were sent

FixMyContract reads an NDA and shows who it binds, what it covers and how long it lasts, in plain English, before you sign. We review NDAs rather than write them; where a report shows alternative wording for a clause, it is generic text to start a discussion, not a finished clause.

👉 Check an NDA free — your first analysis is free, no card, no deadline to use it.

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Keep reading

• What to watch for in an NDAGuide
• How to negotiate an NDAGuide
• Non-competes inside an NDAGuide
• NDAs for employeesGuide