What is a nondisclosure agreement?

They are popularly known as a confidentiality agreement, through which parties consent to share their confidential data mentioned in the confidentiality clause of the nondisclosure agreement (nda). They agree never to disclose such information to any third party and breach the deal. 

What is confidential information?

It is that information that the parties in an agreement tend to keep within themselves during the execution of their business relationship. They clearly define the secret information through a contract and exchange it with each other. It also explains every term and condition clearly. 


The nda template accommodates different types of nondisclosure agreements. They are unilateral, bilateral, and multi-lateral. 

Unilateral nondisclosure agreement

Under this type, two parties are involved. Only one party shares the secret information among the two parties, and the other party must maintain the secrecy of this information. 

Bilateral nondisclosure agreement 

Here, both parties disclose their confidential information and promise to protect the data from the third parties through the agreement.

Multi-lateral nondisclosure agreement 

In this type of agreement, more than two parties are involved. Of all, only one party will disclose the information, and all others promise to protect the information. 

What does an NDA template contain?

  • Clear definition of confidential information.
  • Clauses explaining every aspect of such information
  • Information that is not confidential.
  • Terms and conditions of confidentiality.
  • Details about disclosure (with whom the information can be shared)
  • Exceptions 
  • Remedies 

Benefits of entering into a nondisclosure agreement 

The primary asset of any business is its intellectual property and a nondisclosure agreement act as a guardian in protecting it. All sensitive information is made safe within the nda template. You can know the other benefits below.

  • It clearly states the confidential matter. It avoids anything ambiguous and says the exact purpose of the agreement.
  • Enclosing various clauses within the template helps maintain the secrecy between the parties involved. Thus, it becomes a legal mandate to conserve confidentiality.
  • This agreement is flexible as it provides a timeline until the parties must conserve the secrecy. 
  • As the agreement is legally binding, the party that breaches the conditions will be liable and compensated for the damages.
  • It also makes way for interruption through the arbitration process or even takes the issue to court, reports the problem, proves violation, demands compensation, and solves the issue.

Factors to consider before entering into a nondisclosure agreement

Drafting is the most crucial factor when it comes to the nondisclosure agreement. It can make or break the purpose of the contract. Considering its importance, both the parties sit together and finalise the draft. Below are the other factors to consider. 

  • Ensure which information must be considered confidential—unnecessary, vague and unambiguous statements to be avoided. 
  • Ensure that both parties clearly understand what and until when they are bound to guard such information. 
  • It is better to analyse each clause’s fairness before sharing it with the other parties. As it has the potential to impact the business’s reputation, a double confirmation is well- needed. 
  • Also, it is good to check that no clauses are contradictory to one another. It can create confusion among the parties, and they may even think of winding it up.
  • Since these are legally binding agreements, a neat draft can save the parties and arbitrators time and money by quickly sorting out the issue. 

To sum up, these are the fundamentals of a nondisclosure agreement. Knowing its importance and need, you can decide whether your business needs one or not.

By Manali