Non-disclosure agreement
en-dee-AY
A legal contract that prevents one or both parties from sharing confidential information disclosed during a business relationship.
An NDA is a contract that protects confidential information. When two companies discuss a potential partnership, acquisition, or integration, they sign an NDA before sharing sensitive details like revenue numbers, product roadmaps, or technical architecture.
NDAs can be one-way (one party shares, the other protects) or mutual (both parties share and protect). Most business NDAs are mutual. They specify what counts as confidential, how long the obligation lasts (typically 2-5 years), and what exceptions exist (information that becomes public, was already known, or is independently developed).
In the SaaS world, NDAs are routine. Prospects sign them before receiving SOC 2 reports. Partners sign them before discussing integration plans. Potential acquirers sign them before seeing the data room. If you are in B2B sales, you will sign hundreds of NDAs. An NDA is different from a DPA, which specifically addresses personal data processing.
Examples
An enterprise prospect requests a SOC 2 report.
The security team sends a mutual NDA first. The prospect signs it. Then the company shares the SOC 2 Type II report, which contains details about internal security controls.
Two companies discuss a potential acquisition.
Before opening the data room, both companies sign a mutual NDA. The target company shares financial details, customer lists, and technical architecture. The NDA prevents the acquirer from using that information if the deal falls through.
A startup discusses an API integration with a larger company.
The larger company requires an NDA before sharing their unpublished API documentation. The NDA covers the API specs, authentication details, and any business terms discussed.
Frequently asked questions
How long does an NDA last?
Most business NDAs last 2-5 years from the date of disclosure. Some information, like trade secrets, may be protected indefinitely. The duration is specified in the agreement.
What happens if someone violates an NDA?
The injured party can sue for damages. Remedies typically include monetary damages and injunctive relief (a court order to stop further disclosure). Proving damages can be difficult, which is why NDAs also serve as a deterrent.
Related terms
The legal contract between a software provider and its users that governs how the product may be used.
Legal rights that protect creations of the mind, including patents, copyrights, trademarks, and trade secrets.
A contract between a data controller and data processor that defines how personal data will be handled, required under GDPR.
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