7 Basic Elements of a Non-Disclosure Agreement

A non-disclosure agreement is a legal contract that is signed by two or more parties or entities who want to do business with each other and have the interest to share confidential information. This type of agreement can also be made between employee and employer to protect company’s sensitive data. It is made to create a confidential relationship between the parties for protection of business secrets or confidential information. NDA contains secretive information that may be detrimental when in unauthorized hands. (Read more about what is non-disclosure and confidentially agreement?).

Upon the signing of this agreement, a binding relationship is made between the party or an entity sharing this information, the recipient and the disclosing party. This sensitive information includes the trade secrets, for example, digital code or product formulas which offer a market advantage to the side disclosing.

All trade secrets require confidentiality protection because it may protect them. Breaching of non-disclosure agreement occurs when there is leakage of the underlying secrets.

As the significance of NDA increases, the complexity of this document also increases. Before entering into this agreement, all involved parties should be aware of elements of a non-disclosure agreement. Here is information about essential aspects of Non-disclosure agreements despite whether a single or all parties involved in the deal are exchanging this secret information.

Identification of Parties

A non-disclosure agreement should contain explicit information about parties involved. In this document, the person giving data is written as disclosing party while the person who promises not to reveal information is written as a recipient. If recipient shares this information with other people and it is necessary to disclose this information to affiliated people, then a new agreement will be signed among recipients.

Description of Confidential Information

It identifies the disclosures whether oral, written, or marked as confidential which should be kept a secret by maintaining the specifics of that secretive information. Both parties should be clear about the secretive information. Disclosing party should define confidential information so that recipient party may not use any loopholes in the agreement.


Identify information which is not part of the confidential data, or information already well known to the public or recipient. Also, it includes authorized disclosures to contractors and employees based on what they should know.
There might be some exceptions that don’t result to the breaching of the underlying contract in case of disclosure on recipient’s part. These exceptions occur when an individual apart from the recipient discloses confidential information. Precise information about these exceptions should be included in NDA.

Terms of Agreement

All terms of the contract should be well explained and in the knowledge of parties involved for example what is the time limit for which the information should be kept confidential etc.

A two-dimensional requirement includes non-disclosure which restricts the leakage of the secretive information to third parties and non-use which restricts recipient using or stealing the data in an unauthorized manner.

Disclosure Consequences

A non-disclosure agreement should contain the information about consequences of revealing or disclosure of information to any party who fails to maintain the secrecy.

Additional Provisions

Other provisions may be included in these agreements dealing with the return of company’s property after ceasing of contract.

Apart from the above elements, the disclosing side may want to include other provisions to this contract to control the actions of the recipient further as well as ensuring the disclosing party will quickly take legal remedies if a breach of confidentiality occurs. Other provisions might include injunction clauses, jurisdiction clauses, etc.


Sample non-disclosure agreement