Types, Clauses, Benefits and Everything Else that You Must Know About Non-Disclosure Agreement

Types, Clauses, Benefits and Everything Else that You Must Know About Non-Disclosure Agreement

NDA or a Non-Disclosure Agreement is a contract that binds one or more than one party to not to disclose a confidential information. The information has been shared with each other as a part of the business which they were doing together. For every business, confidential information can be incredibly valuable, and it may be very difficult to do business without sharing such information. Therefore, it is quite imperative for businesses to enter into NDAs to protect their confidential information. 

The major benefits of using NDA:

  • It provides confidence to share confidential information.
  • NDA also ensures clarity on exactly what information is confidential.
  • It limits the reasons a party can use the confidential information.
  • NDA helps to preserve Key Business Relationships.

What does NDA include?


  • The names of the parties who wish to enter the agreement


  • The confidential information which the parties share 
  • Things that are excluded from confidentiality
  • The time for which the NDA stands valid
  • Other provisions

Types of NDA

Unilateral NDA

Two parties are involved and out of them, there will only be one party who shall share the confidential information.

Bilateral NDA

Two parties are involved and both of them shall share confidential information.

Both parties shall share and receive confidential information. Therefore, both the parties will become disclosing as well as receiving parties.

Multilateral NDA

Three or more parties are involved.

One party shall share confidential information while the remaining parties who are a part of the agreement shall promise not to disclose the confidential information that has been shared.

Since one party will be sharing confidential information, only one party shall become the disclosing party. The remaining parties shall become the receiving parties.

Clauses to be included in NDA

The most important key clauses which will increase the worth of a NDA are:

1) Definition of Confidential Information

The most important component of a non-disclosure is how the confidential information is defined. This is why agreements are signed stating what information is not to be disclosed.

2) The Parties

Besides stating the Disclosing and the Recipient parties, a non-disclosure should also contain a clause that specifies who else will be the recipient. The confidential information should be disclosed by the party during the course of due diligence and business discussions. The third-party recipients of the confidential information who are critical for the performance of this legal contract and should be included in the non-disclosure.

3) The Terms and Duration

Every non-disclosure agreement should have a clearly defined timeframe. When the agreement ends and for how long does the confidential information need to be confidential etc.

4) The Permitted Use of the Information

This clause says that we need to clearly define the intended use of the shared and confidential information.

5) The Legal Obligation to Disclose

At some point of time, it may be legally compulsory to disclose the information they agreed to keep confidential under this type of agreement. These directives may come from a government agency, administrative entity or via the courts.

6) The Return of the Information

When the agreement ends, the recipient party is expected to return or destroy the confidential information.

It’s mandatory that NDA should contain a clause clearly stating that how and when this will occur which largely depends on the circumstances of the relationship.

7) The Jurisdiction

A clause should be there in non-disclosure which specifies that court has jurisdiction over any possible conflict between business parties and over this any legal action could be taken.

8) The Remedies

 Agreement should also include a clause that specifies the acceptable remedies in the case of a breach from the Recipient Party. The fair remedy for this is a mutual agreement as the cost of breach could result in lengthy legal battle.

9) Responsibility over Legal Fees

The parties should have a mutually agreeable clause that clearly defines who will be responsible for legal fees if a suit has to be filed.

10) The No Binding

Last, but certainly not least, no non-disclosure is complete without a non-binding clause.