What Is a Non-Disclosure Agreement? NDA Definition, Types, and What It Should Include

A non-disclosure agreement (NDA) is a legally binding contract in which one or more parties agree to keep specified information confidential and not to share it or use it for their own benefit. It sets out what counts as confidential, who is allowed to see it, how long the duty to protect it lasts, and what happens if someone breaks the promise. NDAs are signed before investors review financials, before employees see source code, and before a vendor gets access to customer data.

Last updated July 2026.

What is a non-disclosure agreement?

A non-disclosure agreement is a contract that legally obligates one or more parties to protect confidential information they receive and to use it only for an agreed purpose. It turns a spoken promise of secrecy into an enforceable duty, so the person sharing sensitive material has a legal remedy if the recipient leaks it or misuses it.

People also call it a confidentiality agreement, a confidential disclosure agreement (CDA), or a secrecy agreement. The core idea is the same across all of these names: one side hands over information it wants kept private, and the other side agrees in writing to keep it that way. The document names the parties, describes the confidential information, states the purpose the information can be used for, and fixes how long the obligation runs.

What is the difference between an NDA and a confidentiality agreement?

There is no meaningful legal difference. Non-disclosure agreement and confidentiality agreement describe the same type of contract, and courts treat them the same way. Some lawyers use confidentiality agreement for employment and healthcare settings and NDA for business deals, but the label does not change how the document is interpreted or enforced.

If you see a title like Confidentiality and Non-Disclosure Agreement, that is one document using both terms for clarity, not two separate contracts. What matters is the substance: the clauses, the definition of confidential information, and the duration, not which of the interchangeable names sits at the top of the page.

What are the types of NDAs?

There are three types of NDAs, based on who is sharing information. A unilateral (one-way) NDA has one party disclosing and the other receiving. A mutual (bilateral) NDA has both parties disclosing to each other. A multilateral NDA involves three or more parties, at least two of whom disclose, all bound by a single agreement instead of separate paired contracts.

A mutual NDA is often easier to negotiate because both sides feel equally protected, so neither pushes hard to weaken the terms. A multilateral NDA saves paperwork when several companies collaborate, since one contract replaces the web of separate agreements each pair would otherwise sign.

What should an NDA include?

A strong NDA includes a clear definition of confidential information, exclusions, a statement of permitted purpose and permitted disclosures, a term or duration, a return-or-destruction clause, governing law, and remedies. If it touches trade secrets, it should also carry the whistleblower immunity notice required by the Defend Trade Secrets Act. Each clause narrows what the recipient can do with the information.

The checklist below covers the clauses that do the real work. Skipping any of them tends to create the disputes that end up in court, usually because the parties never agreed on what confidential actually meant or how long the duty was supposed to last.

Note the last row. A non-solicitation agreement stops someone from poaching your employees or customers, and it is a different promise from confidentiality. A non-compete goes further and restricts where a person can work at all, which many states limit heavily or refuse to enforce. If you need that kind of restriction, handle it in a dedicated document such as a non-compete agreement rather than burying it inside an NDA.

How long does an NDA last?

An NDA lasts as long as its term clause says. Ordinary confidential information is commonly protected for two to five years as a matter of common practice, not because any law fixes that number. Trade secret obligations are often written to run indefinitely, because trade secret protection can last forever as long as the information genuinely stays secret.

That split is deliberate. Once a product roadmap or a pricing sheet is a few years old, it usually loses its value, so a fixed term is fair to the recipient. A formula, algorithm, or customer list that stays secret keeps its value indefinitely, so many agreements let the confidentiality duty survive for those items until the information stops being secret. Read the survival clause and the definition of confidential information together to see how long you are actually bound.

Are NDAs legally binding?

Yes. An NDA is a binding contract when it has the normal elements: an offer, acceptance, consideration (something of value exchanged), and a lawful purpose. A signed NDA between competent parties is enforceable, and a court can order damages or an injunction if it is breached. Reasonable, specific terms enforce more reliably than vague or overbroad ones.

Consideration is worth a closer look in the employment context. If an NDA is signed at the start of a job, the job itself is the consideration. If you ask a current employee to sign one mid-employment, some states require you to give something new in return, such as a raise or a bonus, or the agreement may not hold up.

What happens if you break an NDA?

Breaking an NDA is a breach of contract. The disclosing party can sue for money damages to cover the harm caused, and can ask a court for an injunction ordering the person to stop disclosing or using the information. If the breach also involves misappropriating a trade secret, additional remedies under state and federal trade secret law may apply, including, in willful cases, enhanced damages.

Here is where the fine print pays off. Under the Defend Trade Secrets Act of 2016 (18 U.S.C. 1833(b)), any agreement governing trade secrets that is entered into or updated after May 11, 2016 must include a notice of whistleblower immunity. If an employer leaves that notice out, it cannot recover exemplary damages or attorney fees from that employee in a trade secret action. A missing paragraph can quietly strip away the strongest remedies.

Can an NDA cover illegal activity?

No. An NDA cannot lawfully stop someone from reporting a crime, cooperating with a government investigation, or reporting possible securities violations to the SEC. SEC Rule 21F-17 bars anyone from using a confidentiality agreement to impede a person communicating with the SEC about a possible securities law violation, and the agency has brought enforcement actions over NDA language that tried to.

Two more limits matter. The Speak Out Act, signed in December 2022, makes pre-dispute non-disclosure and non-disparagement clauses unenforceable in disputes involving sexual assault or sexual harassment under federal law. And the whistleblower immunity provisions of the Defend Trade Secrets Act protect people who disclose a trade secret in confidence to the government solely to report a suspected violation of law. An NDA that tries to override any of these is unenforceable to that extent, though the rest of the contract usually survives.

Do you need a lawyer to write an NDA?

No, you do not legally need a lawyer to write an NDA, and many businesses use a solid template for routine situations. That said, a lawyer is worth the cost when the stakes are high, when trade secrets are involved, when the deal crosses state or national borders, or when the terms are unusual. A template handles the common cases, and a lawyer handles the edge cases.

If you use a template, at minimum confirm it defines confidential information clearly, includes the standard exclusions, sets a sensible term, names a governing law, and carries the Defend Trade Secrets Act whistleblower notice when trade secrets are in play. NDAs in vendor and supplier onboarding are a good example of a repeatable, template-friendly flow: once the NDA is signed and the vendor is approved, the relationship usually moves straight on to issuing and tracking purchase orders, so a clean, consistent template keeps that pipeline moving.

Signing the NDA

An NDA only protects you once it is signed, and it should be signed before you share anything. An electronically signed NDA is valid under the federal ESIGN Act and state UETA laws, so a click-to-sign document carries the same legal weight as ink on paper. What makes the electronic version genuinely useful is the audit trail: a record of who signed, when they signed, and from what IP address, which is the evidence that proves the recipient actually agreed before they saw a single confidential file.

If you want to send one now, you can sign an NDA online and have the completed copy, with its audit trail, stored automatically. For the underlying legal background on why a click carries the same weight as a wet signature, see our guide on whether electronic signatures are legally binding. The practical takeaway: get the signature first, keep the audit trail, and you have both the confidentiality promise and the proof that it was made.