How to Write a Good Non-Disclosure Agreement (NDA) or Confidentiality Agreement - COREDO

How to Write a Good Non-Disclosure Agreement (NDA) or Confidentiality Agreement

Updated: 06.05.2023

A Non-Disclosure Agreement (NDA) or Confidentiality Agreement is a legally binding document that aims to protect sensitive and confidential information from being disclosed to third parties. NDAs are commonly used in business relationships, employment situations, and developing and protecting new products or ideas.

Creating a good NDA is essential to ensure that all parties involved understand the terms and obligations of the agreement and to protect against any potential legal issues.

Here are some key steps to follow when writing an NDA:

  1. Identify the purpose of the NDA: It is essential to clearly define the purpose of the NDA and the specific information that needs to be protected. This can include trade secrets, business plans, proprietary technology, financial information, and other sensitive information. It is helpful to create a list of the specific types of information that will be covered under the NDA, as this will help define the scope of the agreement.
  1. Determine the scope of the NDA: The scope of the NDA should clearly define the parties involved, the duration of the agreement, and any exclusions or limitations. For example, suppose the NDA is being used in an employment context. In that case, it may specify that the employee is not allowed to disclose company secrets to competitors or use the information for personal gain. The scope should also specify exceptions to the agreement, such as information already known to the recipient or information obtained from a third party without the recipient’s knowledge or consent. Determining whether the NDA covers verbal and written communication and electronic communication such as email or text messages is also essential.
  1. Define the terms of the NDA: The terms of the NDA should outline the obligations of the parties involved, including any restrictions on the use and disclosure of confidential information. It is important to clearly define what constitutes a breach of the NDA and the consequences of such a breach. This could include damages, injunctive relief, or other legal remedies. The terms should also specify the agreement’s jurisdiction, governing law, and dispute resolution provisions. If the NDA is being used in an international context, it may be necessary to specify which country’s laws will govern the agreement in case of a dispute.

  1. Consider any legal implications: It is essential to consider any legal implications of the NDA, including issues related to intellectual property, antitrust laws, and employment laws. It is recommended to seek legal counsel to ensure that the NDA complies with relevant laws and regulations. This is especially important when the NDA is being used internationally, as different countries have different laws and regulations governing confidentiality agreements. It is also important to consider any potential conflicts with other agreements or obligations that the parties involved may have. For example, suppose an employee is signing an NDA as part of their employment contract. In that case, ensuring that the NDA does not conflict with any non-disclosure or non-compete provisions in the employment contract is essential.
  1. Make sure the NDA is clear and concise: A NDA should be written in clear and concise language that is easy for all parties to understand. It is important to avoid using legal jargon or ambiguous terms that could be open to interpretation. It is also helpful to use bullet points or numbered lists to break up the text and make it easier to read and understand. It is a good idea to have the NDA reviewed by legal counsel to ensure that it is clear and understandable for all parties involved.
  1. Please include any additional provisions: Depending on the specific needs of the parties involved, it may be necessary to include additional provisions in the NDA. For example, an NDA may include provisions related to the handling of physical copies of confidential documents or the destruction of such documents upon the termination of the agreement. Other common provisions include provisions related to the return or destruction of confidential materials upon request and provisions related to the confidentiality of the NDA itself. It is also a good idea to include provisions related to the confidentiality of any discussions or negotiations related to the NDA and the use of confidential information to evaluate a business opportunity or potential partnership.
  1. Have the NDA reviewed and signed: Before the NDA becomes legally binding, it is essential to have the agreement reviewed by legal counsel and signed by all parties involved. It is also a good idea to keep a copy of the signed NDA on file for reference. In some cases, it may be necessary to have the NDA notarised or witnessed to provide additional legal protection.

It is also a good idea to review and update the NDA on a regular basis, particularly if there are any changes in the business relationship or the confidential information is protected. This can help to ensure that the NDA remains effective and up-to-date.

In conclusion, a Non-Disclosure Agreement (NDA) or Confidentiality Agreement is a crucial tool for protecting sensitive and confidential information in business relationships and other situations. By following these steps and seeking legal counsel as needed, you can create a strong and effective NDA that serves the needs of all parties involved.

By clearly defining the purpose and scope of the NDA, outlining the terms and obligations of the parties involved, and considering any legal implications, you can create a document that effectively protects the confidential information being shared.

So, having a well-written NDA in place is crucial to protect your sensitive information and avoid potential legal issues.

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