How to Write an NDA (Non-Disclosure Agreement)

Key Takeaways

• NDAs are legally binding contracts covering everything from new hires to investor talks

• Uses are different for employees, investors and partners alike

• There are key elements that should be included in an NDA

How to write an NDA that protects your confidential information effectively? This guide covers everything you need, from key elements and legal requirements to practical steps for creating enforceable agreements.

What Is a Non-Disclosure Agreement? (NDA Meaning & Confidentiality Agreement Explained)

A Non-Disclosure Agreement (NDA)—or confidentiality agreement—is a legally binding contract that establishes how parties will share sensitive information while maintaining confidentiality. NDAs specifically create a confidential relationship, prohibiting unauthorised disclosure of protected information.

Non-disclosure agreements are essential for protecting proprietary information across numerous business scenarios:

• Investor relationships: When seeking funding and sharing business plans or financial data

• New product development: Protecting innovation details, designs, and prototypes

• Employment contracts: Safeguarding company trade secrets from current or former employees

• Business mergers and acquisitions: Facilitating due diligence while maintaining confidentiality

• Strategic partnerships: Enabling information sharing while establishing mutual protection

NDAs can be unilateral (one party shares confidential information) or mutual (both parties exchange sensitive data). They ensure businesses maintain their competitive advantage by legally protecting intellectual property and trade secrets. For organisations with limited legal resources, standardised NDAs offer an efficient solution to manage confidentiality across various business relationships.

Why Use an NDA? Benefits for Employers, Employees and Partners

Non-disclosure agreements offer substantial protection across various business relationships. For employers, NDAs safeguard proprietary information and trade secrets from competitors, preventing current or former employees from sharing confidential data. For employees, NDAs provide clarity on information handling expectations while protecting their interests in dispute scenarios. When negotiating with investors or partners, NDAs facilitate smoother discussions by creating a secure environment for sharing sensitive business strategies and financial information.

Standard NDAs speed up business processes by providing ready-to-use templates that protect intellectual property during product development, partnership negotiations and employee onboarding. The Trade Secrets Regulations and the common law of Breach of Confidence further enhance these protections with additional legal remedies.

What are the Key Elements that Should be Included in an NDA? Step-by-Step Checklist

First, you must ensure you have named all parties in the non-disclosure agreement. When creating a Mutual NDA, where both parties exchange confidential information, the following five elements must be included to ensure your agreement is legally binding:

Step 1: Description of Confidential Information

The agreement's scope should cover what is considered confidential. Make this section broad enough to protect your organisation's intellectual property. For example: "All business strategies, product designs, customer lists, and proprietary information related to [Specific Needs] are deemed confidential."

Step 2: Requirements and Obligations of the Parties

Add a section outlining each party's obligations to keep information confidential. This includes how the Recipient must secure shared data and prevent unauthorised access. This section needs clear definition to ensure you're covered for potential breach of contract.

Step 3: Exclusions

Typically, information already in the public domain is not included in the non-disclosure agreement. This section should also outline where sharing information is permitted in the ordinary course of business with related third parties.

Step 4: The Term of the Agreement

This will specify the length of the agreement. Some NDAs extend indefinitely, while others may be limited to specific periods like five years. For more details, see our FAQ on "How long does an NDA last?".

Step 5: Breach

Your non-disclosure agreement should outline consequences of a breach.

Step 6: How to Create a Non-disclosure Agreement

To create an NDA simply and quickly, use a pre-existing non-disclosure agreement template like the pre-approved templates from Docusign. You should simply:

• Log in to Docusign and choose the NDA Template

• Edit the template to include a description of the confidential information and the scope of the agreement

• Add the requirements of each party

• Add the specific consequences of a breach

• Add the details of all involved parties and send the agreement for electronic signing

Discover more about using Docusign templates.

For common, repeatable transactions, such as onboarding new employees or suppliers, organisations can generally use standardised non-disclosure agreements without needing a lawyer each time.

How to Write an NDA: Templates & UK Examples

Template for NDA

Looking for a reliable NDA template for your UK business? Free UK-specific templates are readily available through government resources and Docusign's pre-approved templates. When selecting a template, first determine whether you need a one-way NDA (where only one party discloses confidential information) or a mutual NDA (where both parties exchange sensitive data).

Breach of an NDA: Consequences & Enforcement

What happens if you break an NDA?

Breaching a non-disclosure agreement has serious consequences. Typically, the first step is a cease and desist letter demanding immediate halt of unauthorised disclosures. If the breach continues, the injured party can pursue legal action for financial damages to compensate for losses caused by the breach. Courts may also grant injunctions prohibiting further disclosure or use of confidential information. Docusign time-stamped eSignature provides valuable evidence of when each party signed the agreement, strengthening your position if enforcement becomes necessary.

Legal remedies in UK courts

UK courts offer several remedies when an NDA is breached. Companies can sue for damages, which may be calculated based on actual financial losses or a reasonable fee for releasing the party from confidentiality obligations. For serious breaches, courts may award an account of profits, requiring the breaching party to surrender gains made from misusing confidential information. Injunctions are commonly granted in NDA cases, as UK law recognises that unauthorised disclosure often constitutes "irreparable harm" that cannot be adequately compensated by money alone.

Other FAQs

What types of information can be protected by an NDA?

Key things that an organisation needs to keep confidential can be included in an NDA. These could include trade secrets, proprietary information, confidential data, sensitive information, formulas, product designs, business strategies, customer lists, financial information, manufacturing processes or customer information.

What information is not protected by an NDA?

Generally, any information that could already be accessed in the Public Domain or anything considered general knowledge is not included. Information obtained independently by the Recipient through legitimate means is also typically excluded.

What can invalidate a non-disclosure contract?

Non-disclosure agreements can sometimes be invalid if the language or conditions used are too broad, the information described is already in the public domain, or a third party has become aware via other means. It may also be invalid if signed by someone without the required authority.

Are NDAs legal in the UK?

Yes, NDAs are legal and enforceable in the UK when properly drafted. However, they cannot be used to prevent reporting of illegal activities or to silence whistleblowers.

How long does an NDA last?

The duration varies based on the sensitivity of information and business needs. Most UK NDAs range from 1-5 years, though some may extend indefinitely for trade secrets. Courts may find overly long durations unreasonable and potentially unenforceable.

How do you make a digital NDA?

Digital NDAs offer the same legal protection as paper versions. Create one by using a template, customising it for your needs, and having all parties sign electronically. Docusign provides legally binding electronic signatures with time-stamps to validate when each Recipient agreed to terms.

Create Your NDA in Minutes with Docusign eSignature

Create a non-disclosure agreement with Docusign by signing up for a trial of Docusign eSignature.

DISCLAIMER: The information in this article is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, so Docusign cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.