A non-disclosure agreement, or “NDA”, requires an individual or entity to withhold from releasing sensitive information. The party receiving the confidential information will be prohibited from sharing verbally, in print, or taking action to benefit themselves. Non-disclosure agreements are primarily used to protect trade secrets which, if made public, could bring legal and/or financial damages to the releasing party. This is common for companies, especially in technology, who do not want their advancements being known by their competitors.

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What is Non-Disclosure?

Non-Disclosure is an agreement to not disclose information to any 3rd party. The recipient is required to hold any proprietary information confidential. This means if there is a trade secret or any valuable information that is received by an individual they are prohibited from telling someone else.

Are Non-Disclosure Agreements Legally Binding?

Yes, non-disclosure agreements are legally binding when signed by the recipient.

Penalties for Breaching

The penalty for breaching a non-disclosure depends on the liabilities stated in the agreement. Most commonly, if the recipient breaks the contract they will be sued for the “maximum allowable by law” which means whatever losses they claim the recipient will be responsible.

Before it gets to that point there will probably be an arbitration process followed by litigation which can take up to two (2) years before being resolved. Therefore, the violated party may seek a settlement if the terms are agreeable.

Unilateral NDA vs Mutual NDA

  • Unilateral NDA – Only 1 person is obligated to withhold information from 3rd parties.
  • Mutual NDABoth parties are obligated to withhold information from 3rd parties.

What is a Trade Secret?

A trade secret is any type of information that holds an economic value and has been intentionally kept confidential by its owner. Trade secrets are kept confidential due to their potential to benefit competing parties. Such secret information can range from a list of potential clients to a fully conceived product or manufacturing technique. If another company or individual obtains a trade secret through improper means, they may be found guilty of having misappropriated the information.

Trade Secret Laws

Trade Secret – State Definitions

What is Misappropriation?

Misappropriation is the unauthorized use of confidential information, property, funds or assets for the benefit of another. Misappropriating a trade secret occurs when a business secret is obtained through illegal or nefarious means. This unlawful activity usually produces an unfair economic advantage in favor of the guilty party. Therefore, federal and state laws have been established to combat misappropriation and protect those who intend to maintain the confidentiality of their trade secrets.

Misappropriation Laws

How to Write

Download in Adobe PDF or Microsoft Word (.docx).

1 – Download The Non-Disclosure Template Displayed Here

Determine whether you wish to work with a PDF or word processing file. The three buttons included with the image (“PDF,” “Word,” and “ODT”) will each deliver access to the labeled file type. If you do not have any editing programs to prepare this document with, you can open this file as a pdf using your browser then print it directly from the screen.

2 – Supplement The Initial Declaration Statement With Information

The articles in this document contain the wording both parties require to safeguard the Disclosing Party’s confidential information. We will need to prepare the introduction with some information before this paperwork can be presented for its signing. Locate the introduction statement (beginning with “This Nondisclosure Agreement”) then fill in the official name of the Disclosing Party on the first blank space. If this is an entity with a suffix (corp., corporation., LLC, etc.) make sure to include it in the Disclosing Party’s name. Naturally, we will want to solidify the Disclosing Party’s identity for this paperwork to function properly. This can be done by documenting the official address of the Disclosing Party’s principal office using the second blank space. Now, record the full name of the Receiving Party on the third blank space. This is the individual or entity that will be privy to sensitive information belonging to the Disclosing Party. The last blank space in this paragraph will require the Receiving Party’s official address.

3 – Both Parties Must Review Each Article Presented

The remainder of this document will be composed of a wealth of information defining the behavior each party expects. Make sure that each signature party reads through the definitions presented to his or her comprehension. 

4 – The Disclosing Party And Receiving Party Must Sing Their Names

The closing paragraph beginning with the words “This Agreement And Each Party’s Obligations…” will lead to the signature area that both parties must use to present their signatures. This area will contain a distinct area for the Disclosing Party and another for the Receiving Party. If either of these parties is a business entity, then a representative elected by that entity must be elected to sign this document on its behalf.

The “Disclosing Party” will have to provide a signature to the “Signature” line of the first signature area.  Then, this signature party must present his or her printed name on the line below and the signature date on the “Date” line.

Next, the “Receiving Party” must sign his or her name on the “Signature” line in the next area. Underneath this signature, the Receiving Party must also print his or her name and provide the signature date on the last line of this area.