A Non-Disclosure Agreement Format Explained

In the era of data-driven decision-making and intellectual property, protecting sensitive information has become vital for individuals and organizations alike. A Non-Disclosure Agreement (NDA), also known as a confidentiality agreement, is a legal document that safeguards confidential information from being misused or disclosed to unauthorized parties. NDAs are particularly important in industries where proprietary data, trade secrets, or confidential business strategies are at stake.

This article provides an in-depth look at the Non-Disclosure Agreement Format, its key components, types, legal enforceability, and best practices to draft one effectively.

What is a Non-Disclosure Agreement?

A Non-Disclosure Agreement (NDA) is a legally binding contract between two or more parties where at least one party agrees not to disclose certain information shared during the course of business, employment, partnership, or any other arrangement. The primary objective of an NDA is to protect confidential, proprietary, or sensitive information from being disclosed without authorization.

NDAs are commonly used in:

• Employment contracts
• Business negotiations
• Start-up partnerships
• Investor pitches
• Outsourcing agreements
• Mergers and acquisitions

Types of NDAs

Before discussing the NDA format, it's important to understand the different types of NDAs, as the structure and clauses may vary slightly depending on the type.

1. Unilateral NDA

A one-way NDA where one party (Disclosing Party) shares confidential information with another (Receiving Party), who is legally bound to maintain confidentiality. Common in employment scenarios.

2. Mutual NDA

Both parties share confidential information with each other and agree to protect each other’s data. Common in joint ventures, collaborations, and partnerships. This is one of the key elements of the Non-Disclosure Agreement Format.

3. Multilateral NDA

Involves three or more parties, where at least one party discloses information and others are bound to maintain confidentiality. Useful in multi-party negotiations.

Importance of a Well-Structured NDA

An improperly drafted NDA can leave loopholes and fail to protect sensitive information. A well-structured NDA:

1. Clearly defines what is “confidential”
   The NDA must specify what information is protected—such as financial data, trade secrets, or product designs.
   Example: Source code of a mobile app shared during a tech partnership.
2. Establishes the duration of confidentiality
   The agreement should state how long the information must remain confidential, even after the contract ends.
   Example: Employee agrees not to disclose client lists for 3 years post-employment.
3. Outlines the rights and obligations of the parties
   It should detail what each party can or cannot do with the confidential data.
   Example: The receiving party must restrict access to shared documents to authorized staff only.
4. Provides remedies in case of a breach
   The NDA should mention what legal actions can be taken if confidentiality is broken.
   Example: The disclosing party may seek compensation or injunctive relief if data is leaked.
5. Is enforceable under applicable laws
   The agreement must follow contract laws to be legally valid and enforceable in court.
   Example: NDA governed by Indian Contract Act, with jurisdiction in Mumbai courts.

Non-Disclosure Agreement Format: Key Elements

A standard NDA format should include the following components:

1. Title of the Agreement

Begin with a clear and unambiguous title such as “Non-Disclosure Agreement” or “Confidentiality Agreement.”

2. Date and Place

Include the effective date of the agreement and the place where it is executed.

3. Parties to the Agreement

Clearly identify all parties involved using their legal names, designations, and addresses.

Example:
This Non-Disclosure Agreement (“Agreement”) is made and entered into on this 4th day of June 2025, by and between:

1. ABC Pvt. Ltd., having its registered office at [Address] (hereinafter referred to as the “Disclosing Party”),
2. XYZ Technologies LLP, having its office at [Address] (hereinafter referred to as the “Receiving Party”).

4. Definition of Confidential Information

Specify what constitutes “Confidential Information”, including business plans, financial records, client data, technical documents, source codes, etc.

Example:
“Confidential Information” shall include, but is not limited to, technical data, trade secrets, know-how, research, product plans, business strategies, financial information, and customer lists disclosed by the Disclosing Party to the Receiving Party.

5. Purpose of Disclosure

Mention the purpose for which the confidential information is being shared.

Example:
The confidential information is being disclosed for the purpose of exploring a potential business collaboration between the parties.

6. Obligations of the Receiving Party

List the obligations of the party receiving the confidential information, such as:

1. Not disclosing the information to third parties
   The receiving party must not share confidential data with anyone outside the agreement.
   Example: A freelance designer cannot forward a client’s marketing plan to another agency.
2. Restricting access only to authorized personnel
   Only individuals with a legitimate need should have access to the confidential information.
   Example: An HR manager shares employee salary data only with the payroll team.
3. Using the information only for the agreed purpose
   The shared data should be used strictly for the reason mentioned in the NDA.
   Example: A software prototype shared for testing cannot be used to develop a rival product.
4. Taking reasonable security measures
   The receiving party must implement safeguards to prevent unauthorized access or leaks.
   Example: Encrypting confidential files and storing them in password-protected folders.

7. Exclusions from Confidentiality

Specify what information does not fall under confidentiality, such as:

1. Publicly available data
   Information that is already accessible to the public is not considered confidential.
   Example: A company’s registered office address found on its official website.
2. Information already in possession of the receiving party
   If the receiving party already knew the information before the NDA, it’s not protected.
   Example: A supplier’s pricing list already in the vendor’s database before the NDA was signed.
3. Information obtained legally from a third party
   Data received lawfully from someone not bound by confidentiality isn’t covered.
   Example: Industry research bought from a market research firm that didn’t sign the NDA.
4. Information independently developed
   If the receiving party creates the information on their own without using confidential inputs, it's excluded.
   Example: A tech team builds a similar feature without referencing the disclosing party’s proprietary code.

8. Term and Duration

Indicate the term of the agreement and the period of confidentiality, even after termination.

Example:
This Agreement shall remain in force for a period of two (2) years from the effective date. The obligation to maintain confidentiality shall survive the termination of this Agreement for a period of five (5) years.

9. Return or Destruction of Information

Include a clause requiring the receiving party to return or destroy the confidential information upon request or termination of the agreement.

10. Remedies and Legal Recourse

Mention the consequences of breach, including the right to seek:

1. Injunctive relief

A court order that stops the receiving party from further disclosing or misusing confidential information.
Example: A startup obtains an injunction to prevent a former employee from leaking trade secrets to competitors.

2. Damages

Monetary compensation awarded for losses caused by a breach of confidentiality.
Example: A business sues a vendor for ?5 lakhs after unauthorized sharing of a product prototype.

3. Legal fees

The breaching party may be required to pay the legal costs incurred by the injured party.
Example: The court orders the violator to reimburse the disclosing party’s lawyer and court expenses.

11. Dispute Resolution

Define how disputes will be resolved—whether through arbitration, mediation, or court litigation, and specify the jurisdiction and governing law.

Example:
This Agreement shall be governed by and construed in accordance with the laws of India. Any disputes arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of the courts at Delhi.

12. Miscellaneous Clauses

Include other standard clauses:

• Entire Agreement: Declares that the NDA is the complete understanding between parties.
• Severability: If one part is invalid, the rest remains enforceable.
• Amendment: Any changes must be in writing and signed by both parties.
• Waiver: Failure to enforce a provision does not constitute a waiver.

13. Signatures

Both parties must sign the agreement, with:

• Name
• Designation
• Date

Sample NDA Format (Outline)

NON-DISCLOSURE AGREEMENT

This Non-Disclosure Agreement (“Agreement”) is entered into on [Date], by and between:

1. [Disclosing Party Name], located at [Address]; and

2. [Receiving Party Name], located at [Address].

1. Definition of Confidential Information

2. Purpose

3. Confidentiality Obligations

4. Exclusions

5. Duration

6. Return/Destruction of Information

7. Remedies for Breach

8. Governing Law and Jurisdiction

9. Miscellaneous

10. Signatures

[Party 1 Signature, Name, Title, Date]

[Party 2 Signature, Name, Title, Date]

Non-Disclosure Agreement Format Displayed

Legal Validity and Enforceability

An NDA is legally enforceable if it meets the requirements of contract law, including:

• Free consent of parties
• Lawful object
• Consideration
• Capacity to contract

Courts in India have upheld the validity of NDAs under the Indian Contract Act, 1872, provided they are reasonable and not against public policy.

Best Practices When Drafting an NDA

1. Tailor the NDA to Specific Needs
   Avoid using overly generic templates. Customize the NDA based on the type of business, nature of information, and level of risk.
2. Use Precise Language
   Vague or ambiguous terms can lead to confusion and weaken enforceability.
3. Mark Confidential Information Clearly
   It’s helpful to label documents or communications as “Confidential” to avoid disputes.
4. Include Specific Time Limits
   Don’t make the confidentiality obligation indefinite unless absolutely necessary.
5. Use Digital NDAs with E-Signatures
   Legally valid in India under the Information Technology Act, 2000, and widely accepted in global business practices.

Conclusion

A Non-Disclosure Agreement is a powerful tool to protect sensitive business information. Whether you're a startup founder pitching to investors, an employer onboarding new staff, or a business entering a joint venture, having a well-drafted NDA ensures your interests are legally protected. While templates are helpful, seeking legal guidance for critical partnerships is highly recommended to ensure the NDA is enforceable and tailored to your specific needs.

By understanding the components, types, and implications of a Non-Disclosure Agreement Format, businesses can establish trust and collaboration without the fear of intellectual property or sensitive data misuse. Contact Online Legal India to get suggestions to prepare an NDA.