Types of non-disclosure agreements
Different types of non-disclosure agreements and how to use them, including one-way and two-way agreements
A non-disclosure agreement (NDA) is a legal contract between you and another party not to disclose information you have shared for a specific purpose.
You can use an NDA to:
- share intellectual property
- share commercial or trading information
- formalise a relationship, eg between an employer and employee
You can tailor these agreements to your requirements. You can choose from several types of non-disclosure agreements.
One-way and two-way NDAs
You can use a one-way NDA when only one business is sharing information and the other agrees to keep it confidential.
You can use a two-way NDA (also called a mutual NDA) when both businesses are sharing confidential information with each other and want to be sure that neither will disclose their trade secrets.
Learn about the different ways to prepare a non-disclosure agreement.
Precedent confidentiality agreement
A precedent confidentiality agreement is used for mergers and acquisitions. If a company wants to buy your business, it will want to look at your books and assets. An NDA can provide an element of protection for your confidential information and trade secrets if the prospective buyer pulls out of the deal.
If you don't know exactly what information you will need to disclose during a commercial relationship, you can still use an NDA. It is a good idea to classify as confidential any information that you will disclose later so that the NDA still applies.
NDAs for employees
Current and former employees are responsible for most breaches of confidentiality. Employees are under an implied duty not to use trade secrets in a manner that will harm your business, but it is best to get this in writing and to specify to the employee exactly what is confidential. An NDA should also make provision for when the employee leaves your business.