Non-Disclosure Agreements
Non-disclosure agreements (NDAs) protect trade secrets, proprietary data, and other confidential information from being shared or used without permission. By using them, businesses can share important information with third parties without worrying about it getting into the wrong hands, like competitors.
Before you sign an NDA, also known as a confidentiality agreement, it's wise to consult with a solicitor. While you can find NDA templates online, they may not meet your specific needs, which could leave you vulnerable in certain situations.
At Lawhive, our network of small business solicitors have extensive experience in drafting, reviewing, and negotiating non-disclosure agreements for affordable fixed fees through our secure, easy to use online platform.
Contact us to request a callback from our Legal Assessment Team and get a quote for the services of a specialist non-disclosure agreement solicitor.
What is a non-disclosure agreement?
Non-disclosure agreements (NDAs) are legal contracts used to protect confidential information. They set out the terms and conditions under which sensitive information can be shared while preventing disclosure to unauthorised parties.
Types of NDAs
There are two kinds of non-disclosure agreements:
One-way NDAs
Mutual NDAs
What is a one-way non-disclosure agreement?
A one-way non-disclosure agreement (sometimes called a unilateral contract) works when only one person shares information and another promises to keep it secret. It's one of the most straightforward types of NDAs and is used to stop the person receiving the information from sharing it with others.
For example, a one-way non-disclosure agreement may be appropriate when a founder hires a consultant to help them and wants to be sure any information shared with them is kept confidential.
What is a mutual non-disclosure agreement?
A mutual NDA (bilateral agreement) involves a reciprocal exchange of confidential information between all parties. That means all parties disclose confidential information to each other, with the understanding that it will be kept between them.
For example, a mutual NDA may be appropriate when a business is in discussions with another about a potential collaboration on a new project. Both sides may need to share sensitive information about their strategies and products. A mutual NDA would outline what types of information are considered confidential and the responsibilities of both parties to maintain that confidentiality.
When to use a non-disclosure agreement
You should use a non-disclosure agreement before you share confidential information with someone else. For example, when:
Sharing proprietary information with potential investors during negotiations.
Disclosing trade secrets or intellectual property to employees, contractors, or consultants.
Discussing business strategies or plans with third parties.
Sharing customer or client lists, supplier information, or financial data with external parties.
Collaborating with other businesses on a project that involves sharing sensitive information.
The best way to keep confidential information safe is to not share it with anyone. But that is not always practical, as you may need to seek advice or collaborate with third parties to grow your business, which inevitably involves sharing some confidential information.
In these situations, it’s important to make your NDA specific and clear regarding the information that should not be disclosed and the consequences of a breach.
What type of NDA do I need?
Deciding between a one-way or mutual NDA depends on your relationship with the other party and the information shared.
If you're the sole discloser of sensitive information, a one-way NDA is enough without complicating matters with a mutual agreement.
However, if both parties share confidential information, a mutual NDA is better as it requires both to maintain confidentiality.
What should I include in a non-disclosure agreement?
When drafting a non-disclosure agreement, you should include:
Who is bound by the agreement
What information needs protection
How and when the information will be disclosed
Provisions for the return or destruction of disclosed information
Situations where disclosure is required by law (forced disclosure)
The penalties if the agreement is breached
The right to apply for an injunction in case of a breach to prevent further disclosure.
The scope of an NDA depends on what information is considered confidential. Typically, an NDA defines confidential information broadly, covering anything a reasonable person would see as confidential. However, courts won’t uphold overly broad clauses. So, it’s important to find the right balance.
Can I create my own NDA?
You can create your own NDA using a standard template, however the more important the deal or information, the more necessary it is to have a customised agreement.
Without a doubt, a bespoke agreement drafted or reviewed by a specialist business lawyer will give you the best legal protection possible over a templated version downloaded from the internet.
At Lawhive, our network of small business solicitors is on hand to draft and review non-disclosure agreements to make sure they protect your interests as far as possible. To get a free quote and case evaluation, contact us today.
Who should sign an NDA?
Everyone who needs to keep the information confidential should sign an NDA. This typically includes employees, contractors, business partners, and anyone else who might have access to sensitive information covered by the agreement.
Are NDAs legally binding in the UK?
An NDA is legally binding as long as it’s used for legitimate business reasons but it can’t be enforced if information becomes public.
NDAs also shouldn’t be used to silence individuals, like employees, from reporting serious issues. The government is monitoring NDAs closely for this reason and will take action to stop enforcement if they are used in this way.
How long do NDAs last?
Non-disclosure agreements often last for 3, 5, or 10 years, but there's no legal requirement for a specific duration. It's more about deciding how long the information needs to remain confidential.
Parties should discuss and agree on a timeframe that suits their needs and objectives, usually matching the anticipated relationship length. It’s also wise to include a provision ensuring information remains protected even after the relationship or contract ends.
How do I get out of a non-disclosure agreement?
Getting out of an NDA can be tough, but it's doable. For instance, if the info in the agreement is already public, the NDA isn't valid. Likewise, if the NDA covers up something illegal, it may not hold up.
You can also look for termination clauses or review the agreement's language to find ways out. A lawyer can assist you in figuring this out and suggest the best steps based on your situation.
What happens if you break an NDA?
Breaking a non-disclosure agreement (NDA) can have serious consequences, determined by what's stated in the agreement. Penalties should be reasonable and not excessive, as they may not hold up in court. If you breach an NDA, you might face legal action and financial penalties.
Generally, violating an NDA isn't a criminal offense. However, revealing trade secrets is illegal and can lead to imprisonment, even if you didn't sign an NDA.
How much does an NDA cost in the UK?
At Lawhive, the cost of an NDA drafted by a specialist small business solicitor starts from £149. This service includes:
A 30-minute telephone or video call consultation with a specialist solicitor
Advice on standard terms and the suitability of the agreement for your business purposes
Drafting of the non-disclosure in line with your instructions
Contact our Legal Assessment Team today for a free personalised quote.
Get expert advice on non-disclosure agreements from Lawhive
NDAs are valuable tools for individuals, businesses, and organizations in various situations. They allow for presenting inventions or business ideas to potential partners or investors and sharing financial and marketing information with prospective buyers of a business.
At Lawhive, our network of expert solicitors is on hand to create solid non-disclosure agreements that protect your trade secrets while allowing you the flexibility to collaborate with third parties.
Contact us today to find out more.