What Is a Non-Disclosure Agreement (NDA)

A Non-Disclosure Agreement (NDA) is your legal shield when sharing sensitive business information. Whether you're pitching to investors, hiring a freelancer, or onboarding a new team member, an NDA makes sure your proprietary data, strategies, or creative work stays protected.

This agreement prevents the recipient from disclosing or misusing what you've shared—everything from product roadmaps and customer lists to pricing models and internal processes.

✅ Why it matters: Without an NDA, once your ideas are out in the open, you have little recourse if someone uses or leaks them. An NDA gives you enforceable protection and leverage.

When to Use an NDA

• Pitching to Investors or Partners
  Keeps your vision, strategy, and IP secure during early conversations.

• Hiring Contractors or Agencies
  Ensures your creative briefs, product specs, or client info aren’t reused or shared.

• Onboarding Employees
  Formalizes expectations from day one—especially in roles involving sensitive data.

• Joint Ventures or Collaborations
  Avoids awkward disputes by defining what can and can't be shared externally.

• Mergers or Acquisitions
  Prevents leaks during due diligence or sale negotiations.

Checklist: What to Include in Your NDA

✅ Clear definition of “confidential information”
✅ Duration of confidentiality (e.g., 2 years)
✅ Whether it's mutual or one-way
✅ Permitted uses of shared information
✅ Breach consequences and legal remedies
✅ Exceptions (e.g., publicly known info)

✔ SMVRT Legal’s NDA Template covers all of this—professionally written, ready to edit.

Common NDA Mistakes to Avoid

⚠️ Vague or Overly Broad Language
If your NDA simply says “all confidential information is protected,” it’s too vague to enforce. Courts may throw it out unless you clearly define what counts as confidential (e.g., client lists, financial data, source code).
Example: Saying “company information” is protected is too broad—spell out specific categories instead.

⚠️ Missing a Defined Timeframe
Without a set duration (e.g., 2 years after disclosure), your NDA might be interpreted as indefinite or unenforceable. Courts generally won’t enforce secrecy forever unless it’s trade secret-related.
Example: “Confidentiality obligations last for 3 years from the date of disclosure.”

⚠️ No Remedies or Enforcement Clause
If someone breaches the NDA, what happens next? An NDA should specify your legal options—like injunctive relief or financial damages—to give the contract real teeth.
Example: Include a clause that says the disclosing party may seek an injunction to stop unauthorized disclosure.

⚠️ Not Using a Mutual NDA When You Should
One-way NDAs only protect one party’s information. If both parties are sharing sensitive data (common in partnerships, M&A talks, or joint ventures), use a mutual NDA to protect both sides.

Example: Startups pitching to investors usually use one-way NDAs, but co-developers of a new product should use a mutual NDA to protect each other.

NDA vs. Confidentiality Clause vs. Trade Secret Protection

• NDA (Non-Disclosure Agreement) = Standalone Legal Contract
  An NDA is a dedicated agreement that creates a formal legal obligation to keep shared information confidential. It can be one-way (unilateral) or mutual, depending on whether one or both parties are disclosing sensitive data.
  Example: A startup founder shares a business plan with a freelance developer under a signed NDA to ensure ideas and user data stay protected.
• Confidentiality Clause = Section Inside a Larger Contract
  A confidentiality clause is built into a broader agreement—like an employment contract, contractor agreement, or vendor deal. While it’s not a standalone NDA, it’s still legally enforceable.
  Example: A marketing agency contract includes a clause stating that all client data, ad spend details, and brand strategies must be kept confidential during and after the engagement.
• Trade Secret Protection = Legal Status Under IP Law
  Trade secrets include formulas, algorithms, business processes, and other proprietary information that give a business a competitive edge. However, to qualify for trade secret protection under state or federal law (like the Defend Trade Secrets Act), the company must actively safeguard the information.
  Example: Coca-Cola’s secret formula is protected as a trade secret because it’s never publicly disclosed, access is restricted, and NDAs are signed by those who know it.