Anon-disclosure agreement (NDA), also known as aconfidentiality agreement (CA),confidential disclosure agreement (CDA),proprietary information agreement (PIA), orsecrecy agreement (SA), is alegalcontract or part of a contract between at least twoparties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to.Doctor–patient confidentiality (physician–patient privilege),attorney–client privilege,priest–penitent privilege andbank–client confidentiality agreements are examples of NDAs, which are often not enshrined in a written contract between the parties.
It is a contract through which the parties agree not to disclose any information covered by the agreement. An NDA creates a confidential relationship between the parties, typically to protect any type of confidential and proprietary information ortrade secrets. As such, an NDA protects non-public business information. Like all contracts, they cannot be enforced if thecontracted activities are illegal. NDAs are commonly signed when two companies, individuals, or other entities (such as partnerships, societies, etc.) are considering doing business and need to understand the processes used in each other's business for the purpose of evaluating the potential business relationship. NDAs can be "mutual", meaning both parties are restricted in their use of the materials provided, or they can restrict the use of material by a single party. An employee can be required to sign an NDA or NDA-like agreement with an employer, protecting trade secrets. In fact, some employment agreements include a clause restricting employees' use and dissemination of company-owned confidential information. In legal disputes resolved bysettlement, the parties often sign a confidentiality agreement relating to the terms of the settlement.[1][2] Examples of such agreements are The Dolby Trademark Agreement withDolby Laboratories, the Windows Insider Agreement, and theHalo CFP (Community Feedback Program) withMicrosoft.
In some cases, employees who are dismissed following their complaints about unacceptable practices (whistleblowers), or discrimination against and harassment of themselves, may be paid compensation subject to an NDA forbidding them from disclosing the events complained about. Such conditions in an NDA may not be enforceable in law, although they may intimidate the former employee into silence.[3]
A similar concept is expressed in the term "non-disparagement agreement", which prevents one party from stating anything 'derogatory' about the other party.[4]
A non-disclosure agreement (NDA) may be classified as unilateral, bilateral, or multilateral:
A unilateral NDA (sometimes referred to as a one-way NDA) involves two parties where only one party (i.e., the disclosing party) anticipates disclosing certain information to the other party (i.e., the receiving party) and requires that the information be protected from further disclosure for some reason (e.g., maintaining the secrecy necessary to satisfy patent laws[5] or legal protection for trade secrets, limiting disclosure of information prior to issuing a press release for a major announcement, or simply ensuring that a receiving party does not use or disclose information without compensating the disclosing party).
A bilateral NDA (sometimes referred to as a mutual NDA, MNDA, or a two-way NDA) involves two parties where both parties anticipate disclosing information to one another that each intends to protect from further disclosure. This type of NDA is common for businesses considering some kind of joint venture or merger.
When presented with a unilateral NDA, some parties may insist upon a bilateral NDA, even though they anticipate that only one of the parties will disclose information under the NDA. This approach is intended to incentivize the drafter to make the provisions in the NDA more "fair and balanced" by introducing the possibility that a receiving party could later become a disclosing party or vice versa, which is not an entirely uncommon occurrence.
A multilateral NDA involves three or more parties where at least one of the parties anticipates disclosing information to the other parties and requires that the information be protected from further disclosure. This type of NDA eliminates the need for separate unilateral or bilateral NDAs between only two parties. E.g., a single multiparty NDA entered into by three parties who each intend to disclose information to the other two parties could be used in place of three separate bilateral NDAs between the first and second parties, second and third parties, and third and first parties.
A multilateral NDA can be advantageous because the parties involved review, execute, and implement just one agreement. This advantage can be offset by more complex negotiations that may be required for the parties involved to reach a unanimous consensus on a multilateral agreement.
A NDA can protect any type of information that is not generally known. They may also contain clauses that will protect the person receiving the information so that if they lawfully obtained the information through other sources they would not be obligated to keep the information secret.[6] In other words, the NDA typically only requires the receiving party to maintain information in confidence when that information has been directly supplied by the disclosing party
Some common issues addressed in an NDA include:[7]
Deeds of confidentiality and fidelity (also referred to as deeds of confidentiality or confidentiality deeds) are commonly used inAustralia. These documents generally serve the same purpose as and contain provisions similar to NDAs used elsewhere.
NDAs are used inIndia.[8] They have been described as "an increasingly popular way of restricting the loss ofR&D knowledge through employee turnover in Indian IT firms".[8] They are often used by companies from other countries who areoutsourcing oroffshoring work to companies in India.[9][10] Companies outsourcing research and development ofbiopharma to India use them, and Indian companies in pharmaceuticals are "competent" in their use.[11][12] In thespace industry, NDAs "are crucial".[13] "Non-disclosure and confidentiality agreements ... are ... generally enforceable as long as they are reasonable."[14] Sometimes NDAs have beenanti-competitive and this has led to legal challenges.[15]
In theUnited Kingdom, the term "back-to-back agreement" refers to an NDA entered into with a third party who legitimately receives confidential information, putting them under similar non-disclosure obligations as the initial party granted the information.Case law in a 2013Court of Appeal decision (Dorchester Project Management vBNP Paribas) confirmed that a confidentiality agreement will be interpreted as a contract subject to therules of contractual interpretation which generally apply in English courts.[16]
NDAs are often used as a condition of a financial settlement in an attempt to silence whistleblowing employees from making public the misdeeds of their former employers. There is a law, thePublic Interest Disclosure Act 1998, which allows "protected disclosure" despite the existence of an NDA, although employers sometimes intimidate the former employee into silence despite this.[3][17]
In some legal cases where the conditions of a confidentiality agreement have been breached, the successful party may choose betweendamages based on an account of the commercial profits which might have been earned if the agreement had been honoured, or damages based on the price of releasing the other party from its obligations under the agreement.[18]
Commercial entities entering into confidentiality agreements need to ensure that the scope of their agreement does not go beyond what is necessary to protect commercial information. In the case ofJones v Ricoh, heard by theHigh Court in 2010, Jones brought an action against the photocopier manufacturerRicoh for breach of their confidentiality agreement when Ricoh submitted atender for a contract with a third party. Ricoh sought release from its obligations under the agreement via an application forsummary judgment, and the court agreed that the relevant wording "went further than could reasonably be required" to protect commercial information. The agreement was held to be in breach ofArticle 101 of the Treaty on the Functioning of the European Union, which prohibits agreements which had the object or effect of distorting competition, and was therefore unenforceable.[19]
As of 2025[update] NDAs have long been misused in the UK to prevent people, usually employees, from reporting sexual and other abuse they have suffered. Parliament has consulted regarding proposed legislation to curb such use, with a debate on the use of NDAs by employers to cover up workplace abuse and discrimination.[20][3]
In Ireland, confidentiality agreements or non-disclsure agreements are affected by the Maternity Protection, Employment Equality and Preservation of Certain Records Act 2024.[21]The Act amends the Employment Equality Act 1998 by restricting the use of non-disclosure agreements (NDA).[22]
The 2024 Act renders void any NDA that prohibits an employee from disclosing:
NDAs are very common in the United States, with more than one-third of jobs in America containing an NDA. TheUnited States Congress passed theSpeak Out Act in 2022, which prohibits them in regard tosexual harassment andsexual assault, and the bill was signed into law by PresidentJoe Biden on December 7, 2022.[23]
Some states, includingCalifornia, recognise special circumstances relating to NDAs andnon-compete clauses.California's courtsand legislature have signalled that they generally value an employee's mobility and entrepreneurship more highly than they do protectionist doctrine.[24][25]
[M]ost landlords and tenants are united in interest in not wanting the terms of their settlement publicized in a public forum where they may be misunderstood or misinterpreted as being weak, scared or simply not feeling strongly about their business and their actions.
If you've ever signed a settlement agreement resolving some dispute, chances are pretty good it contained a confidentiality provision. In many cases, one side or both wish to keep the terms of a settlement to themselves – whether to avoid disclosure of amounts paid to settle or for some other reason.
A confidentiality clause might suggest to the worker that they do not have rights, such as whistleblowing or taking a matter to a tribunal, that in fact cannot be abrogated. Or they could be unreasonably expansive and insist that a worker not discuss the issue under consideration with people such as the police, a doctor, or a therapist.
Second, the use of confidentiality agreements can prevent the forfeiture of valuable patent rights
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