Understanding Non-Disclosure Agreements (NDAs)

Published Date:
June 14, 2023

What Is a Non-Disclosure Agreement (NDA)?

A non-disclosure agreement (NDA) is a legally binding contract that establishes a framework to start a confidential relationship between two parties sharing sensitive business information. 

Non-disclosure agreements are known by other names such as:

  • Confidentiality Agreement (CA)
  • Confidentiality Disclosure Agreement (CDA)
  • Secrecy Agreement (SA)
  • Proprietary Information Agreement (PIA)

NDA’s are quite commonly used by businesses to share sensitive information without the fear that the information will end up in the hands of a competitor or a third party. 

Types of NDAs

Mutual NDA

Where there are two businesses exploring the possibility of partnering together. As part of this relationship, each party may disclose information about its business operations with the other party. In such arrangements, both parties mutually agree not to disclose the other party’s sensitive information.

Unilateral NDA

In this scenario, only one party discloses confidential information and expects the other party to maintain confidentiality and protect the information shared.

There could also be a Multilateral NDA where more than two parties agree to entering a business relationship and maintain confidentiality of the information shared by the other parties.

What is the Purpose of a Non-disclosure Agreement?

The purpose of an NDA is to have a transparent framework for sharing, accessing, processing and protecting confidential information. Here are the key topics for consideration

  • Defining the scope of confidential information: What information is considered confidential or not.
  • Accessibility of confidential information: What are the channels of sharing confidential information and where and how the information should be stored. What happens if there is a security breach?
  • Processing the information: How will the data be consumed and who gets to access the information. 
  • Protecting the information: What are the legal obligations of the parties to managing the confidential information and what constitutes a breach of contract.

When are NDAs used?

NDA’s are usually executed at the beginning of a business relationship and can be for a variety of transactions with internal and external stakeholders. Some common examples could include:

  • With a business partner: when entering into a business deal for e.g. a partnership
  • With an Investor: When a company is fundraising with investors or during M&A in order to protect trade secrets or business strategies
  • With a customer: while starting a new project for a customer
  • With employees or contractors: Often required to sign an NDA in order to protect business sensitive information

Key Facts

  1. Volume: Non-Disclosure Agreements (NDAs) are the highest volume of contracts managed by a business. 
  2. Time: NDAs can take up 15-30% of an in-house legal professional’s time. 
  3. Cost: This can result in an average of 200$ - 1500$ per document.

Ready to automate your NDA process?

Using Scribe Zero CLM, you can automate your standardized NDAs process up to 75% helping you save valuable time and money of your legal specialists so they can work the important stuff.

Roll out your First NDA

Starting an All-Access trial account which gives you access to our entire CLM including our Contract Marketplace. And create the NDA in 3 simple steps

  • Download NDA Template
  • Enter your business specific data
  • Set Workflow (Approval, Collect Counterparty Info)
  • Send for Signature

Commitment free for 14 days. While you're at it, make sure to test the platform to see what features help and we can then discuss plans and pricing.

Download NDA Template for free

Click below to download the template for free. No questions asked.

Use the oneNDA Template for free

oneNDA is a crowd-sourced, open-source non disclosure agreement that has been created by the legal community. And it’s entirely free to use. Download here or use the readymade agreement on Scribe Zero.

About Scribe Zero

Scribe Zero is a digital contract lifecycle management (CLM) platform which helps organisations with all aspects of digital contracting. We are harnessing the power of machine learning and AI to secure and enhance our customers' experiences. Our CLM platform helps customers to improve their speed of contracting without compromising on their compliance requirements. Whether that's a Sales agreement, an employment contract, a licensing agreement or an NDA, the Scribe Zero CLM has been built to improve collaboration, extract critical insights from documents and route tasks to the right people at the right time.