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Non-Disclosure Agreement Drafting

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NDA Agreement Overview

A non-disclosure agreement (NDA), also known as a confidentiality agreement, is a legally binding contract that protects proprietary information. It ensures the secrecy of sensitive data like trade secrets, business plans, software code, and more, by restricting its disclosure to unauthorised third parties.

Consultants and agencies, who often handle confidential information from multiple clients across the same industry, frequently enter into NDAs to uphold legal obligations and maintain client trust.

Types of Non-Disclosure Agreement

  • One-way or unilateral agreement - Here, only one party has the confidential information to be shared with another party. The party in possession is called the ‘disclosing party’ and the other one is named the ‘receiving party’.
  • Two-way or bilateral agreement - Here, two parties are involved and both have the confidential information to be shared.
  • Multilateral agreement - Here, 3 or more parties are involved. One of them discloses sensitive or confidential information and the others promise to protect such information from further disclosures.

Benefits of a NonDisclosure Agreement

  • Protects Business Secrets- An NDA is one of the most common ways to protect trade secrets and other confidential information. Consultants and agencies are usually asked to sign one to protect trade secrets.
  • Enhances Client Relationships- Businesses that work on third-party projects require their employees to sign non disclosure agreements, to restrict the use and disclosure of confidential information, and assure clients that their data is safe

Non Disclosure Agreement Format

Non-Disclosure Agreement Format

Key Elements of Non-disclosure Agreement

The following essential clauses should be present in a legitimate nondisclosure agreement:

  1. The Parties-This section will mention if the nondisclosure agreement is a unilateral, bilateral, or multilateral one. The details of the party/parties (names, addresses, etc) involved should be mentioned in this part.
  2. Term of the Agreement- The non disclosure agreement template must mention the date of execution of the agreement and the duration of the existence of the same. It should also mention if the rules and obligations related to disclosure of information will be applicable after the expiry of the nondisclosure agreement or not.
  3. Confidential Information-The non disclosure agreement format must specify what information is to be kept in the ‘confidential’ category or to be protected.
  4. Disclosure of Confidentiality-This section of the non-disclosure agreement specifies the intentions for which the confidential data/information will be used. It will also specify with whom such information can be shared.
  5. Dispute Resolution-The non disclosure agreement must mention the remedial measures the parties will resort to, to resolve disputes, if any. It will include alternative forms of dispute resolution they may choose to employ, such as arbitration.

How to Write a Non-Disclosure Agreement?

  • Step 1: Once you send in a request, our representative will get in touch with you to understand your requirements
  • Step 2: If we require more details, we will contact you for the same
  • Step 3: Once these are received, we will work on the request and send the non-disclosure agreement format for your review within 3 to 4 working days

Note:In case you would like any changes to the nondisclosure agreement format, our law consultant will work on them. Two rounds of iterations are included in the original price.

Exclusions to NDAs

An NDA, or non-disclosure agreement, is a legal contract between two parties that outlines what information is confidential and agrees that the receiving party will not disclose that information to unauthorized third parties. However, some exclusions exist to what is regarded as confidential information under an NDA. These exclusions typically include:

  • Information that is already in the public domain.
  • Information that the receiving party already knows or can independently obtain.
  • Information that is disclosed by the disclosing party with the express consent of the disclosing party.
  • Information that is disclosed by the receiving party under a legal obligation, such as a court order.

When Do You Need a NDA Agreement?

You need an NDA whenever you are sharing confidential information with someone who is not your employee or agent. This could include situations such as:

  • Hiring a consultant
  • Entering into a joint venture
  • Negotiating a merger or acquisition
  • Sharing trade secrets or intellectual property
  • Discussing new product development
  • Seeking funding from investors

Requirements for an Non-Disclosure Agreement

NonDisclosure Agreement
  • Identification of the Parties: The NDA should clearly identify the parties involved in the agreement.
  • Definition of Confidential Information: The NDA should define the types of confidential information that are covered by the agreement.
  • Scope of the Agreement: The Non-Disclosure Agreement should outline the terms of the contract, including how long the confidentiality obligation will last.
  • Exceptions to Confidentiality: Any exceptions to the confidentiality obligation, such as information that is already public knowledge, should be specified in the NDA.
  • Obligations of the Recipient: The NDA should outline the obligations of the recipient, including the duty to maintain confidentiality and restrictions on the use of confidential information.
  • Remedies for Breach: The Nondisclosure Agreement should specify the remedies that are available in the event of a breach of the agreement, such as injunctive relief or monetary damages.
  • Governing Law and Jurisdiction: The NDA should specify the governing law and jurisdiction that will apply in the event of a dispute.

NDA Agreement Template

A confidentiality agreement between two or more parties is outlined in a Non Disclosure Agreement (NDA) template, a legal document. An NDA template can be used to protect confidential and proprietary information, trade secrets, and other sensitive data from being disclosed to unauthorised third parties. Here is a general template of the same.

NON-DISCLOSURE AGREEMENT (NDA)

This Nondisclosure Agreement (hereinafter referred to as the ‘Agreement’) is made and entered into on [Date] (the ‘Effective Date’) by and between [Name of Disclosing Party] (the ‘Disclosing Party’), having its principal place of business at [Address], and [Name of Receiving Party] (the ‘Receiving Party’), having its principal place of business at [Address].

1. Purpose

The Disclosing Party is engaged in a business that involves the creation, development, and marketing of [Product/Service/Information]. The Disclosing Party agrees to disclose certain information to the Receiving Party for the sole purpose of [Purpose of Disclosure] because the Receiving Party requests it. This information is confidential and proprietary in nature.

2. Confidential Information

The term ‘Confidential Information’ in this agreement pertains to all information that is designated as ‘Confidential’ or which the receiving party is aware or has reason to believe is confidential, proprietary, or classified as a trade secret by the disclosing party. This includes any information that the disclosing party discloses to the receiving party through oral or written means, or by allowing the Receiving Party to inspect physical objects.

3. Non-Disclosure and Non-Use

Without the prior written consent of the disclosing party, the receiving party agrees to keep the confidential information in strict confidence and not to disclose, copy, or use any of the confidential information for any purpose other than the one for which it was disclosed. The Receiving Party shall implement reasonable physical, electronic, and procedural safeguards, among other measures, to ensure the confidentiality of the confidential Information.

4. Term and Termination

Unless one of the parties gives the other party written notice that they wish to terminate it earlier, this Agreement will be in effect for the duration of [Term]. Upon termination of this agreement, the receiving party is required to immediately return or destroy any confidential information that is under their possession or control. Additionally, the receiving party must provide written certification to the disclosing party confirming that all confidential Information has been returned or destroyed.

5. Remedies

It is acknowledged by both parties that if there is a breach of this agreement, the disclosing party may suffer irreparable harm, and monetary compensation may not be a sufficient remedy to address such harm. In order to enforce the terms of this agreement, the disclosing party shall be permitted to request injunctive relief without posting a bond, in addition to any other legal or equitable rights or remedies that may be available.

6. Governing Law and Jurisdiction

The laws of [State/Country] shall govern and interpret this agreement, disregarding any provisions concerning choice of law or conflicts of law. Any legal proceedings or actions that arise from or pertain to this agreement shall be conducted solely in the courts of [State/Country].

7. Entire Agreement

The parties' entire understanding regarding the subject matter of this agreement is contained in this agreement, which supersedes all prior or current agreements or understandings, whether in writing or verbally. Except in writing and with the consent of both parties, this Agreement may not be changed or modified.

IN WITNESS WHEREOF, the parties have executed this agreement as of the effective date.

Disclosing Party: [Name]

By: ___________________________

[Name], [Title]

Receiving Party: [Name]

By: ___________________________

[Name], [Title]

What Happens If You Violate a Non-Disclosure Agreement?

If you violate a Nondisclosure Agreement (NDA), you may face legal consequences, such as monetary damages or injunctive relief. The precise repercussions will vary depending on the conditions of the particular NDA and the type of violation.

In the event of a violation, NDAs typically contain provisions for monetary compensation and injunctive redress. Damages may include actual damages suffered by the disclosing party as a result of the breach, as well as any profits gained by the breaching party as a result of the breach. Injunctive relief may include court orders to stop the breaching party from continuing to disclose or use the confidential information, or to return any confidential information in their possession.

Real-World Example of an NDA

  • In 2018, the Indian government signed an NDA with Google to develop a cloud-based platform for storing and processing government data. The NDA was designed to protect the confidentiality of the government data.
  • In 2020, the Indian pharmaceutical company Cipla entered into an NDA with the US pharmaceutical company Gilead Sciences to develop a generic version of Gilead's HIV drug Truvada. The NDA was designed to protect the confidential information related to the development of the generic drug.
  • In 2021, the Indian startup Unacademy entered into an NDA with the Chinese technology company Tencent. The NDA was designed to protect the confidential information related to Unacademy's business plans and operations.

Information Protected With Non-Disclosure Agreement

The type of information that is protected under an NDA can vary depending on the context of the agreement, but generally includes:

  • Trade Secrets: Information that is valuable to a business or organization and is kept confidential to maintain a competitive advantage, such as manufacturing processes, formulas, or customer lists.
  • Business and Financial Information: Information about a company's finances, sales figures, marketing plans, and other business-related information that is not publicly available.
  • Intellectual Property: Knowledge that should be kept private about patents, trademarks, copyrights, or other types of intellectual property.
  • Personal Information: Confidential information about individuals, such as personal identification information, health information, or other sensitive personal data.
  • Proprietary Software or Technology: Information related to proprietary software, technology, or inventions, including source code, algorithms, and designs.
  • Customer or Supplier Information: Information related to customers or suppliers, such as contact information, pricing information, or sales.

Why Vakilsearch?

  • We execute legal work for over 1000 companies every month by leveraging our tech capabilities and the expertise of our team of legal professionals
  • We ensure a seamless interactive process with the government
  • Your original price includes two rounds of iterations
  • Come on board and experience the ease and convenience with us
  • If you need any changes done to the agreement, our lawyers will do the needful and send it across to you for your view once again.

FAQs on Non disclosure Agreement in India

The two primary types of non-disclosure agreements (NDAs) are:
  • Unilateral NDAIn this type, one party (the disclosing party) shares confidential information with another party (the receiving party), who agrees not to disclose or use the information for their benefit. |
  • Mutual NDA (or Bilateral NDA):
  • In a mutual NDA, both parties exchange confidential information and agree to keep each other's information confidential. It offers protection to both parties' sensitive data.
    Yes, an NDA (non-disclosure agreement) is a legally binding contract that outlines the obligations of the parties involved regarding the protection of confidential information. Breach of an NDA can result in legal consequences.
    An example of a non-disclosure could involve a tech company sharing its proprietary software code with a potential investor. The investor signs an NDA, agreeing not to disclose or use the code for any purpose other than evaluating the investment opportunity.
    The five key elements of a non-disclosure agreement typically include:
  • Identification of the parties (disclosing and receiving parties).
  • Definition of what constitutes confidential information.
  • Obligations of the receiving party regarding the confidential information.
  • Duration or term of the NDA.
  • Consequences of breach and dispute resolution mechanisms.
  • NDAs are used by various individuals and entities, including businesses, startups, entrepreneurs, inventors, investors, employees, contractors, and anyone seeking to protect confidential information during discussions, negotiations, or partnerships.
    The duration of an NDA can vary and is typically specified within the agreement. It can be for a specific period (e.g., 2 years) or indefinitely, depending on the parties' preferences and the nature of the confidential information.
    While both NDAs (non-disclosure agreements) and MoUs (Memorandum of Understanding) can contain confidentiality clauses, they serve different primary purposes. An NDA focuses on confidentiality and protecting sensitive information, whereas an MoU outlines broader terms of understanding or cooperation between parties, which may or may not include confidentiality provisions.
    Another name for non-disclosure is a confidentiality agreement.
    In the context of a non-disclosure agreement, the term material typically refers to the confidential information or data that the parties intend to protect from disclosure or unauthorized use.
    The law of non-disclosure refers to the legal principles and regulations that govern the creation, enforcement, and interpretation of non-disclosure agreements. These laws can vary by jurisdiction, but they generally aim to protect confidential information and provide remedies in case of breaches.
    Companies and startups use these confidential documents to ensure that their ideas, strategies, and other forecasts won't be stolen by the people they are negotiating or working with.
    Confidential Information is the information that the disclosing party wants to keep from sharing with any person other than the party or parties to the Non Disclosure Agreement. All the data/information which is considered as ‘Confidential’ shall be included in the ‘Confidentiality Clause’ of the non-disclosure agreement to avoid any kind of confusion or misuse of the data/information.
    NDAs can be entered into by any individual, society, corporate bodies and anyone who is referred to as a person or separate legal entity in the eyes of law, who is willing to disclose and/or receive some confidential information to and/or from the other party to the agreement.
    When a party discloses any valuable information/data, in a physical or electronic form to the other party, to avoid any leakage of such valuable information/data and to transfer the same in a secured manner the non-disclosure agreements are made. Thus, non-disclosure agreements are very useful while sharing confidential information with the other party in a secured way so as to avoid any unlawful activity.
    Breaking a NDA agreement is a breach of contract and can result in legal action. It is recommended to consult with a lawyer before taking any action to break a NDA agreement.
    The remedies for breaching of an NDA can include compensation for damages suffered by the non-breaching party, injunctive relief to prevent further breaches, and termination of the agreement.
    The validity of a NDA is typically defined in the agreement and can vary depending on the terms agreed upon by the parties. NDAs can range from a few months to several years, depending on the nature of the confidential information and the purpose of the agreement.
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