NDA Contract Template: How to Write a Non-Disclosure Agreement

A non-disclosure agreement (NDA) is one of the most commonly used contracts in business — and one of the most commonly misunderstood. Whether you're sharing a product idea with a potential partner, hiring a contractor, or entering acquisition talks, a well-drafted NDA is often the first legal document that changes hands.

This guide explains what an NDA is, how to structure one, what every clause should say, and what makes NDAs fail in court.

What is an NDA?

A non-disclosure agreement is a legally binding contract in which one or both parties agree to keep certain information confidential. The party sharing the information is called the disclosing party; the party receiving it is the receiving party.

NDAs go by several names: confidentiality agreement, confidentiality and non-disclosure agreement (CNDA), proprietary information agreement (PIA), or secrecy agreement. They all accomplish the same core goal: preventing the unauthorized use or sharing of sensitive information.

Types of NDAs

Unilateral (One-Way) NDA

One party discloses; the other party keeps it confidential. Used when:

• Hiring contractors or freelancers
• Sharing a product concept with a manufacturer
• Onboarding employees with access to proprietary systems

Mutual NDA

Both parties disclose confidential information and both are bound to protect it. Used when:

• Negotiating a partnership or joint venture
• Exploring a merger or acquisition
• Sharing technical integrations between two companies

Multilateral NDA

Three or more parties are bound by a single agreement. Less common, but useful for multi-party negotiations or consortium arrangements where one document is cleaner than multiple bilateral NDAs.

Key Clauses in an NDA

1. Definition of Confidential Information

This is the most important clause. A vague definition either protects nothing (too narrow) or is unenforceable (too broad).

What to include:

• Categories of information covered (trade secrets, business plans, customer lists, financial data, technical specs, source code)
• How it must be marked or identified (e.g., "labeled 'Confidential'" or "disclosed under this Agreement")
• Whether oral disclosures are included (and how they're confirmed in writing)

What to exclude: Information the receiving party already knew, information that becomes public through no fault of the receiving party, and information independently developed by the receiving party.

2. Obligations of the Receiving Party

The receiving party must agree to:

• Keep the information confidential using at least the same care used for their own confidential information (but no less than reasonable care)
• Not use it for any purpose outside the stated purpose
• Not disclose it to third parties without written consent
• Limit internal access to employees or contractors who need to know

3. Permitted Disclosures

Every NDA needs carve-outs for legally required disclosure — for example, if a court orders the receiving party to produce documents. The clause should require the receiving party to:

• Notify the disclosing party promptly
• Cooperate in seeking a protective order
• Disclose only the minimum required

4. Term and Termination

Specify:

• How long the NDA lasts (often 2–5 years from signing or from the last disclosure)
• Whether confidentiality obligations survive termination (and for how long)
• What happens to confidential materials at the end — return or destruction

5. Return or Destruction of Materials

Require the receiving party to return or certify destruction of all confidential materials upon request or at termination. This includes copies, notes, and derivative works.

6. Remedies

State that breach will cause irreparable harm and that the disclosing party is entitled to seek injunctive relief without posting a bond. This matters because courts grant injunctions faster than monetary damages, which can take years to litigate.

7. Governing Law and Jurisdiction

Specify which state's law governs and where disputes will be resolved. This prevents a fight over forum before you even get to the substance of a dispute.

What Makes an NDA Unenforceable?

Courts routinely refuse to enforce NDAs that:

Define confidential information too broadly. "All information shared between the parties" is not a definition — it's a blanket that courts often strike down entirely.

Try to protect publicly available information. If a competitor can find it on Google, it's not confidential.

Have an unreasonably long term. Perpetual confidentiality obligations for routine business information are increasingly rejected, especially in employee contexts.

Lack consideration. An NDA signed after employment has started, with no additional compensation, may not be enforceable. NDAs should be signed before or at the start of a relationship, or be accompanied by something of value.

Are one-sided to the point of unconscionability. Courts in some states (especially California) scrutinize NDAs involving employees or contractors closely.

How to Write an NDA: Step-by-Step

Step 1: Identify the parties. Use full legal names and, for companies, state of incorporation. Specify which role each party is in (disclosing vs. receiving, or both for a mutual NDA).

Step 2: State the purpose. Describe why you're sharing information: "in connection with evaluating a potential business relationship" or "for the purpose of providing software development services." This limits the scope and prevents the receiving party from arguing they can use the information for unrelated purposes.

Step 3: Define confidential information precisely. List specific categories. Include a catch-all only if it's tied to a marking or notification requirement.

Step 4: Set the obligations. Non-use and non-disclosure are the two core duties. Be explicit about both.

Step 5: List the exclusions. Cover the standard carve-outs: public information, prior knowledge, independent development, and legally required disclosure.

Step 6: Set the term. Pick a duration appropriate for the information's sensitivity and the relationship.

Step 7: Add governing law and signatures. Both parties must sign. For businesses, the signatory must have authority to bind the company.

NDA vs. Non-Compete: What's the Difference?

An NDA protects information. A non-compete restricts where someone can work. They serve different purposes and are sometimes confused because they appear in the same employment agreements.

If you need to prevent a departing contractor from working for a competitor — not just from taking your data — you need a separate non-solicitation or non-compete clause, which is subject to strict state-by-state enforceability rules (and is outright banned for most workers in California).

When to Use an NDA

• Before sharing a business idea with a potential co-founder, investor, or partner
• When hiring freelancers or contractors who will access your codebase, customer data, or internal systems
• During M&A due diligence, before exchanging financials and customer data
• Before a product demo to enterprise buyers who will see unreleased features
• Whenever an employee joins and will have access to proprietary systems or client relationships

Generate Your NDA with Contractable

Writing an NDA from scratch is straightforward when you know the structure — but getting every clause right for your specific situation is harder. Contractable generates customized NDAs in seconds: mutual or one-way, with the right definitions and term length for your use case. No lawyers or legal knowledge required.