Non-Disclosure Agreement (NDA)
A non-disclosure agreement creates a legal obligation to keep confidential information private, protecting your business during negotiations, partnerships, and hiring.
What is a Non-Disclosure Agreement (NDA)?
A non-disclosure agreement (NDA), also called a confidentiality agreement, is a legal contract that creates an obligation between parties to keep defined information confidential. NDAs are one of the most commonly used business documents, applied in a wide range of contexts from investor discussions to contractor onboarding.
NDAs can be one-way (unilateral) — where only one party discloses confidential information and the other is bound to keep it secret — or mutual (bilateral) — where both parties share confidential information and both are bound. The right structure depends on the nature of the relationship.
For startups, NDAs are most commonly used before sharing proprietary technology details with potential investors or partners, before beginning due diligence processes, and when engaging contractors who will have access to sensitive business information. Investors — particularly venture capital firms — often decline to sign NDAs at early-stage conversations, but still expect them for formal due diligence.
When do you need a Non-Disclosure Agreement (NDA)?
- ✓Before sharing proprietary technology, business plans, or financial data with potential investors
- ✓When entering negotiations with a potential business partner, acquirer, or licensee
- ✓Before engaging contractors, freelancers, or consultants who will access sensitive information
- ✓During hiring processes where candidates will be exposed to proprietary business information
- ✓Before a product demonstration or technical evaluation by a potential client
- ✓When discussing a potential joint venture, partnership, or M&A transaction
Key provisions to include
Definition of Confidential Information
Precisely defines what information is subject to confidentiality obligations — broader definitions provide more protection.
Obligations of Receiving Party
Sets out how the receiving party must treat confidential information, including restrictions on use, copying, and disclosure.
Permitted Disclosures
Carve-outs for disclosures required by law, court order, or to professional advisors on a need-to-know basis.
Exclusions
Information that is publicly available, already known to the receiving party, or independently developed is excluded.
Term & Duration
Sets how long confidentiality obligations last — typically 2–5 years from disclosure or execution.
Return or Destruction
Requires the receiving party to return or destroy confidential materials on request or at the end of the relationship.
Remedies
Confirms that breach of confidentiality may cause irreparable harm, entitling the disclosing party to injunctive relief.
Common mistakes to avoid
Using an NDA that is too broad, covering publicly available information or information the other party already knew
Not specifying a confidentiality period — NDAs with no end date may be unenforceable in some jurisdictions
Asking investors to sign NDAs at first meetings, which is atypical and can signal inexperience
Failing to label disclosed materials as 'confidential' where required by the agreement
Not including a governing law clause, creating ambiguity about which state's laws apply
Frequently asked questions
Should I ask investors to sign an NDA before pitching?
Generally no, for early-stage pitches. Most venture capital and angel investors decline to sign NDAs at the pitch stage, as they see hundreds of companies and cannot practically commit to confidentiality for every pitch. NDAs become more appropriate during formal due diligence processes, where detailed technical and financial information is shared.
What is the difference between a mutual NDA and a one-way NDA?
A mutual NDA creates confidentiality obligations on both parties — both sides share and receive confidential information. A one-way (unilateral) NDA creates obligations only on the receiving party. Use a mutual NDA when both parties are sharing sensitive information. Use a one-way NDA when only you are sharing information, such as during a product demonstration.
How long should an NDA last?
Most NDAs in commercial contexts specify a confidentiality period of two to five years from the date of disclosure or execution. Perpetual NDAs are sometimes used for particularly sensitive trade secrets. The duration should reflect how long the information is likely to remain commercially sensitive.
Is an NDA enforceable in Australia?
Yes, NDAs are enforceable in Australia as standard contracts, provided they satisfy the requirements for contract formation (offer, acceptance, consideration). They are subject to the usual principles of contract law and any mandatory consumer protection provisions that may apply.
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