A Non-Disclosure Agreement (NDA) is a legally binding contract that protects confidential information shared between parties. Whether you're a freelancer sharing your client's business plans, or a business owner in early-stage negotiations with a partner, an NDA is essential. Here's exactly what to include.
Unilateral vs. Mutual NDAs
Before drafting an NDA, decide which type you need:
- Unilateral NDA: Only one party discloses information and only the other party has confidentiality obligations. Common when a client shares their business plans with a freelancer.
- Mutual NDA: Both parties share confidential information and both have obligations. Common in partnership discussions or when two businesses are exploring collaboration.
1. Identification of the Parties
Clearly identify both parties by their full legal names and addresses. For companies, include the registered company name and registration number. Using "Disclosing Party" and "Receiving Party" (or "Party A" and "Party B" for mutual NDAs) throughout the document makes it easier to read and apply.
2. Definition of Confidential Information
This is the heart of any NDA. Define what counts as "Confidential Information" as broadly as possible. A good definition includes:
- Business plans, strategies, and forecasts
- Financial information, pricing, and costs
- Customer and supplier lists
- Technical information, software code, and trade secrets
- Any information marked as "Confidential" or that a reasonable person would understand to be confidential
Also define what is NOT confidential — information already in the public domain, information the receiving party already knew independently, or information required to be disclosed by law.
3. Obligations of the Receiving Party
Spell out exactly what the receiving party must and must not do:
- Must keep the information strictly confidential
- Must not disclose to any third party without written consent
- Must use the information only for the specified purpose
- Must apply at least the same level of care to protect the information as they apply to their own confidential information
- May only share with employees or contractors on a strict need-to-know basis
4. The Purpose of Disclosure
Always specify why the information is being shared. "Evaluating a potential business partnership" or "Providing freelance web development services" restricts the receiving party from using the information for any other purpose. Without this clause, there's no limit on how the information can be used.
5. Duration
How long must the receiving party keep the information confidential? Two to five years is typical for business NDAs. Some NDAs are indefinite for trade secrets. Make sure to also state that the obligation survives termination of the NDA itself.
6. Exclusions from Confidentiality
Your NDA must carve out the exceptions — otherwise it will be unenforceable or overly broad:
- Information already in the public domain (not through breach)
- Information the receiving party already knew before disclosure
- Information independently developed by the receiving party
- Information required by law or court order to disclose (with notice to the disclosing party)
7. Return or Destruction of Information
Include a clause requiring the receiving party to return or destroy all confidential information upon request or when the NDA ends. This should cover all copies, notes, and derivatives of the original information.
8. Remedies for Breach
Acknowledge that a breach of the NDA could cause irreparable harm that money cannot compensate. This allows the injured party to seek injunctive relief (a court order to stop the breach) in addition to financial damages. Without this clause, you may only be entitled to monetary compensation, which is often difficult to quantify.
9. Governing Law and Jurisdiction
Specify which country's or state's laws govern the agreement, and which courts will handle any disputes. For UK freelancers, English law is standard. For US freelancers, choose your state.
10. Entire Agreement Clause
State that the NDA represents the entire agreement between the parties on this topic, superseding all prior conversations or informal agreements. This prevents a court from considering prior statements or emails to supplement the written terms.
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Create NDA Free →When Do You Need an NDA as a Freelancer?
Use an NDA before:
- Any meeting where a potential client shares their business idea or plans
- Starting a project involving proprietary systems or customer data
- Subcontracting work to another freelancer or agency
- Discussing a potential partnership or collaboration
Many clients will present you with their own NDA. Always read it carefully — and use our contract red flags guide to spot any problematic clauses.
Frequently Asked Questions
What is the difference between a unilateral and mutual NDA?
A unilateral NDA binds only one party (the receiver) to confidentiality. A mutual NDA binds both parties, used when both sides share sensitive information — common in partnerships or collaborations.
How long does an NDA last?
Two to five years is typical for business NDAs. Trade secrets are often protected indefinitely. Always specify the duration in the agreement and state that obligations survive termination of the NDA.
Is an NDA enforceable?
Yes, if properly drafted. An NDA must clearly define confidential information, specify the receiving party's obligations, and be signed by both parties. Overly broad NDAs may be challenged in court.
Do I need an NDA for every client?
Not always, but use one whenever a client shares sensitive business information, trade secrets, financial data, or proprietary systems. It's better to have one and not need it than the reverse.
Can an NDA prevent someone from working in their field?
A proper NDA restricts only the use and disclosure of specific confidential information — it should not prevent you from working. Clauses restricting work for competitors are non-compete clauses, subject to different legal rules.