Non-Disclosure Agreement Template
This annotated NDA template covers the essential provisions of a mutual non-disclosure agreement. Each section includes drafting tips explaining the purpose of the language and common negotiation points.
1. Parties and Effective Date
"This Mutual Non-Disclosure Agreement ('Agreement') is entered into as of [DATE] ('Effective Date') by and between [PARTY A FULL LEGAL NAME], a [STATE/COUNTRY] [ENTITY TYPE] with its principal place of business at [ADDRESS] ('Party A'), and [PARTY B FULL LEGAL NAME], a [STATE/COUNTRY] [ENTITY TYPE] with its principal place of business at [ADDRESS] ('Party B'). Party A and Party B are each referred to individually as a 'Party' and collectively as the 'Parties.'"
Drafting tip:Use full legal entity names, not trade names or DBAs. Verify the entity type (corporation, LLC, limited partnership) and jurisdiction of formation. If a parent company is signing on behalf of subsidiaries, consider whether the NDA should bind affiliates and define "Affiliates" accordingly.
2. Purpose
"The Parties wish to explore a potential business relationship concerning [DESCRIBE PURPOSE -- e.g., 'evaluation of a potential technology licensing arrangement'] (the 'Purpose'). In connection with the Purpose, each Party may disclose certain Confidential Information to the other Party."
Drafting tip:Define the purpose narrowly enough to prevent the receiving party from using confidential information for unrelated purposes, but broadly enough to cover all anticipated discussions. Avoid overly vague language like "general business discussions." The purpose clause limits how disclosed information may be used.
3. Definition of Confidential Information
"'Confidential Information' means any information disclosed by a Party ('Disclosing Party') to the other Party ('Receiving Party'), directly or indirectly, in writing, orally, or by inspection of tangible or intangible property, that (a) is designated as 'Confidential,' 'Proprietary,' or with a similar legend at the time of disclosure, or (b) a reasonable person would understand to be confidential given the nature of the information and the circumstances of disclosure. Confidential Information includes, without limitation, trade secrets, business plans, financial information, customer lists, technical data, product roadmaps, source code, algorithms, and marketing strategies."
Drafting tip:This hybrid approach (marking requirement plus reasonable person standard) balances the discloser's interest in broad protection with the receiver's need for clarity. For oral disclosures, consider adding a requirement to confirm in writing within a specified period (e.g., 10 business days).
4. Obligations of the Receiving Party
"The Receiving Party shall: (a) hold the Disclosing Party's Confidential Information in strict confidence; (b) not disclose such Confidential Information to any third party except as expressly permitted herein; (c) use such Confidential Information solely for the Purpose; (d) protect such Confidential Information using at least the same degree of care it uses to protect its own confidential information, but in no event less than reasonable care; and (e) limit access to such Confidential Information to its employees, agents, and advisors who have a need to know for the Purpose and who are bound by confidentiality obligations no less restrictive than those set forth herein."
Drafting tip:The "at least the same degree of care" standard with a "reasonable care" floor is the most common formulation. Some disclosers push for a "highest degree of care" standard, but this is often resisted as impractical and potentially unenforceable. The "need to know" limitation is essential -- without it, the receiving party could share information broadly within its organization.
5. Permitted Disclosures and Exclusions
"Confidential Information does not include information that: (a) is or becomes publicly available through no breach of this Agreement by the Receiving Party; (b) was known to the Receiving Party prior to disclosure, as demonstrated by written records; (c) is independently developed by the Receiving Party without use of or reference to the Disclosing Party's Confidential Information; or (d) is rightfully received from a third party without restriction on disclosure.
The Receiving Party may disclose Confidential Information to the extent required by applicable law, regulation, or court order, provided that the Receiving Party: (i) gives the Disclosing Party prompt written notice (to the extent legally permitted); (ii) cooperates with the Disclosing Party's efforts to obtain a protective order or equivalent; and (iii) discloses only that portion of the Confidential Information that is legally required to be disclosed."
Drafting tip:The exclusions are standard and rarely contested. For the compelled disclosure provision, the disclosing party should insist on advance notice and cooperation. The receiving party should ensure the notice obligation contains a "to the extent legally permitted" qualifier, since some legal processes (e.g., certain SEC subpoenas, national security orders) prohibit disclosure of the inquiry itself.
6. Term, Termination, and Return of Materials
"This Agreement is effective as of the Effective Date and will remain in effect for [2/3] years unless earlier terminated by either Party upon [30] days' written notice. The confidentiality obligations herein shall survive termination or expiration of this Agreement for a period of [3/5] years from the date of disclosure of the applicable Confidential Information, except that obligations with respect to trade secrets shall survive for so long as such information remains a trade secret under applicable law.
Upon termination or expiration, or upon written request by the Disclosing Party, the Receiving Party shall promptly return or destroy all copies of Confidential Information in its possession, and shall certify such return or destruction in writing. Notwithstanding the foregoing, the Receiving Party may retain one archival copy solely for legal compliance purposes, subject to the continuing confidentiality obligations herein."
Drafting tip: The archival copy exception is practical -- most organizations have legal hold and backup retention policies that make complete destruction impractical. The certification of destruction provides accountability. The trade secret carve-out for indefinite protection is appropriate where the information qualifies as a trade secret, though enforceability of indefinite terms varies by jurisdiction.
7. Governing Law and Dispute Resolution
"This Agreement shall be governed by and construed in accordance with the laws of the State of [STATE], without regard to its conflicts of laws principles. Any dispute arising under this Agreement shall be resolved exclusively in the state or federal courts located in [COUNTY, STATE], and each Party consents to the personal jurisdiction of such courts. Notwithstanding the foregoing, either Party may seek injunctive or other equitable relief in any court of competent jurisdiction to prevent the actual or threatened breach of this Agreement."
Drafting tip: Choose a governing law and venue that is convenient and whose courts have experience with trade secret and confidentiality disputes. Delaware, New York, and California are common choices in US commercial agreements. The carve-out for injunctive relief in any competent court is important because confidentiality breaches often require emergency court action that cannot wait for resolution in a distant forum.
Disclaimer: This template is provided for general informational and educational purposes only and does not constitute legal advice. NDAs should be tailored to the specific circumstances of the transaction, the nature of the information to be protected, and applicable law. Do not use this template without review by qualified legal counsel familiar with your jurisdiction and business context.