How To Make a Free Non-Disclosure Agreement

What Is a Non-Disclosure Agreement?

A non-disclosure agreement, or confidentiality agreement, is used by individuals and businesses to keep sensitive or proprietary information confidential. For example, a high-profile person or celebrity may want an employee to sign an NDA so they won’t reveal personal details or sensitive information about them. A business with trade secrets, intellectual property, and proprietary information may want its employees to sign a standard NDA to keep their information within the company.

The disclosing party is the party with the sensitive information. The receiving party is the party that receives the information and agrees to keep it confidential.

If the receiving party discloses the confidential information, the disclosing party can take legal action to recover monetary damages.

Types of Non-Disclosure Agreements

There are different types of NDAs, unilateral and mutual. A unilateral NDA, or “one-way NDA,” is where one party discloses the information, and the other party keeps it secret. The disclosing party does not have to agree to anything. The receiving party who signed the binding contract has an obligation to protect the disclosing party’s information. A typical unilateral NDA is an employment agreement. Employers have an interest in keeping their business know-how, customer lists, marketing strategies, financial information, and trade secrets out of the public domain. They may require, as a condition of employment, that a prospective employee sign an NDA.

A mutual NDA, or “bilateral NDA,” is a legal document in which two parties agree to a confidential relationship for sharing information. Both parties are bound to keep the information private. An example is when two companies are interested in a business relationship, such as a merger or joint venture. They must share sensitive business information and business plans but do not want the information to become public knowledge. Both parties would sign a confidential disclosure agreement so they can exchange such information and keep it protected.

When To Use a Non-Disclosure Agreement

You should use a non-disclosure agreement when you want to protect business, personal, or sensitive information.

Non-disclosure agreements are especially critical if a business has proprietary information or trade secrets. For example, Kentucky Fried Chicken does not want to reveal its recipes, and Coca-Cola does not want to disclose its formulas. Keeping these trade secrets gives them a competitive advantage. Financial and technology companies use NDAs to protect financial information and customer data. Healthcare and pharmaceutical companies use NDA to keep patient data and research confidential.

What To Include in a Non-Disclosure Agreement

When developing a non-disclosure or proprietary information agreement, you may want to consider the following:

• What type of information is confidential information
• What are the obligations of the receiving party 
• What is the exact scope of information covered by the NDA 
• What is the duration of the confidentiality obligation 
• If there will be exclusions from confidentiality 
• What are the consequences of a breach 
• What are the remedies for breach of contract
• How the receiving party will return the information 
• What state law will govern the provisions of this agreement
• How disputes will be resolved

Once you have determined those answers, you can draft your non-disclosure agreement.

What Not To Include in a Non-Disclosure Agreement

Keep in mind that the agreement will have problems with enforceability if it is too broad in scope, does not have specific termination language, or goes against public policy. For example, an employee cannot be prohibited from disclosing illegal activity to authorities. Under whistleblower laws, employees can report fraud, waste, or abuse without fear of retaliation from their employer.

Additionally, confidential information should not include information that is publicly known. For example, Kentucky Fried Chicken’s recipe is secret, but it is common knowledge that it has 11 herbs and spices. 

Write Your NDA With Our Free Template 

You can create your non-disclosure agreement using our free NDA template below. Use clear and concise language and specify the scope of the NDA (what information is confidential) and the time (how long the information must be kept confidential).

When writing your NDA, be sure to: 

• Identify the parties involved 
• Clearly define what constitutes confidential information 
• Specify the obligations and responsibilities of the parties 
• Determine the duration of the agreement 
• Include any necessary legal provisions 

Check to make sure your non-disclosure agreement conforms with state laws. For example, does an NDA require a notary? Can a signatory use an e-signature?

Use the Following Non-Disclosure Agreement Template as a Guide:

After Creating Your Non-Disclosure Agreement 

Review your agreement and get signatures. Give a copy to the recipient (the receiving party) and keep one on file.

Like other legal documents, non-disclosure agreements can be difficult to understand, especially if you have intellectual property. An experienced business attorney can help answer your questions and address any specific needs or legal requirements.

Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.