Non-Disclosure Agreement (NDA) Clause

A standalone contract that lets the parties trade sensitive information for a stated purpose and sets the limits on what the recipient may do with it.

Reviewed by GC AI Solutions Team•Updated September 2026

Definition

A non-disclosure agreement, also called an NDA or a confidentiality agreement, is a standalone contract in which one or both parties agree to protect information the other discloses and to use it only for a defined purpose. The agreement identifies the parties, defines confidential information, lists the exceptions, states the permitted purpose, sets how long the obligations run, and specifies the remedies for breach. An NDA may be one-way, where a single party discloses, or mutual, where both parties disclose. Courts enforce its terms as contract terms, subject to statutory limits on what a confidentiality promise may cover.

What It Does

For in-house counsel, the NDA is the agreement you sign before you know whether a deal exists. It still has to protect the information if the deal dies and the other side keeps your materials. Two provisions carry most of the weight. The purpose clause decides what the recipient may do with what you sent, and the definition of confidential information decides what the purpose clause reaches.

The agreement also matters under trade secret law. Under 18 U.S.C. 1839(3)(A), information qualifies as a trade secret only where the owner has taken reasonable measures to keep it secret, and a signed NDA is part of that record. A practical test: assume the transaction collapses next month and the recipient hires your lead engineer. Then read the purpose clause, the exceptions, and the return-or-destroy provision to see what you can stop.

Defines the information the recipient must protect and names the categories that fall outside the obligation.
Limits the recipient to a stated purpose, so any use beyond that purpose becomes a breach of contract.
Controls who inside the recipient organization sees the material and makes the recipient answerable for its advisors and subcontractors.
Sets how long the duty runs, often on a separate and longer clock for trade secrets.
States the remedies, usually injunctive relief plus a right to demand return or destruction of the materials.

Filings from 2023 through 2026 show evaluation-stage NDAs being amended more than once as a relationship widens, with the amendments expanding the permitted purpose or adding a standstill.

When You'll See It

Mergers, acquisitions, and investment diligence: Parties sign an NDA before the data room opens, often before price is agreed.

Vendor and partner evaluation: Procurement uses one for technical reviews, pilots, and later deal exchanges.

Employment and contractor onboarding: Offer letters and contractor agreements carry confidentiality duties, including the federal trade-secret notice.

Settlement and separation: Severance and release agreements often add confidentiality and non-disparagement terms.

Research and product collaboration: Life sciences and hardware programs use mutual NDAs before a later license or collaboration.

Use one-way terms when only one side receives information. Use mutual terms when both sides disclose. Definition and duration usually decide the agreement's value.

When confidentiality sits inside a larger contract, see the confidentiality clause. For review mechanics, see the NDA review playbook and AI NDA review.

Examples

Romeo Power, Inc. / Nikola Corporation

Non-Disclosure AgreementM&A diligence purpose limitationMutual2022

"Recipient, on behalf of itself and its Associates, covenants and agrees not to disclose any of the Discloser's Confidential Information publicly or to any third party, to not use such Confidential Information only to evaluate, negotiate and consummate a Potential Transaction and for no unauthorized purpose, and to take reasonable care to prevent the unauthorized use or disclosure of the Confidential Information. Neither party shall disclose the existence or terms of this Agreement, or that the parties are considering a Potential Transaction, without the other party's prior written consent"

Source

Merck Sharp & Dohme LLC / Terns Pharmaceuticals, Inc.

Mutual Confidential Disclosure AgreementTwo-year term with a six-year confidentiality tailMutual2023

"Unless sooner terminated, for or without cause, by written notice from one Party to the other sent to the addresses set forth above, this Agreement shall expire on the second (2nd) anniversary of the Effective Date. Notwithstanding any expiration or termination of this Agreement, the Receiving Party's obligations, and those of its Representatives, of confidentiality and non-use concerning the Confidential Information of the other Party shall survive until the sixth (6th) anniversary of the expiration or earlier termination of this Agreement."

Source

Icosavax, Inc. / AstraZeneca UK Limited

First Amendment to Mutual Non-Disclosure AgreementStandstill added to a mutual NDAMutual2023

"Section 19 is hereby added to the Agreement as follows: "Standstill. As of the date hereof, the Company hereby represents and warrants to Icosavax that neither the Company nor any of its Authorized Representatives acting on the Company's behalf or Affiliates owns or has beneficial ownership of any securities of Icosavax. The Company agrees that, until the termination of the Standstill Period (as hereinafter defined), unless specifically invited in writing by the Board of Directors of Icosavax, neither the Company nor any of its Affiliates, subsidiaries or Authorized Representatives will in any manner, directly or indirectly, effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or participate in: a) any acquisition of (i) any securities (or beneficial ownership thereof), or rights or options to acquire any securities (or beneficial ownership thereof) of Icosavax, or (ii) any assets (other than in the ordinary course of business), indebtedness or businesses of, Icosavax"

Source

Deciphera Pharmaceuticals, Inc. / Ono Pharmaceutical Co., Ltd.

Confidentiality AgreementOne-way purpose limitation in tender-offer diligenceOne-Sided2024

"In connection with your consideration of a possible negotiated business combination transaction between Deciphera Pharmaceuticals, Inc. (the "Company") and you (the "Possible Transaction"), you have requested information relating to the Company that is confidential and proprietary. ... You hereby agree that the Evaluation Material will be kept confidential and used solely for the purpose of evaluating and negotiating the Possible Transaction; provided, however, that the Evaluation Material may be disclosed (i) to your Representatives who need to know such information for the sole purpose of evaluating and negotiating a Possible Transaction"

Source

Bloomin' Brands, Inc. / Eric Christel

Employment Offer LetterEmployee non-disclosure covenant with no end dateOne-Sided2025

"Except in the performance of your duties hereunder, at no time during your employment with the Company or the Employer, or at any time thereafter, shall you, individually or jointly with others, for your benefit of or for the benefit of any third party, publish, disclose, use or authorize anyone else to publish, disclose or use any secret or confidential material or information relating to any aspect of the business or operations of the Employer, the Company or any of their affiliates ... except (i) to the extent required by law, regulation or valid subpoena, or (ii) to the extent that such information or material becomes publicly known or available through no fault of your own."

Source

Nextdoor Holdings, Inc. / Matt Anderson

Advisory Services Letter AgreementWhistleblower immunity noticeOne-Sided2025

"You agree to hold all such Confidential Information in strict confidence, not to disclose it to others or use it in any way, commercially or otherwise (including without limitation lecturing upon or publishing articles concerning Confidential Information), except in performing your obligations under this letter agreement, and not to allow any unauthorized person access to it. ... Nothing in this Section 6 or otherwise in this letter agreement shall limit or restrict in any way your immunity from liability for disclosing Company's trade secrets as specifically permitted by 18 U.S. Code Section 1833, the pertinent provisions of which are attached hereto as Exhibit A."

Source

Negotiate

Disclosing Party Positions:

You want the information protected in the world where the deal dies and the recipient keeps your files.

Define confidential information by category and by the fact of disclosure, so protection does not depend on anyone remembering to stamp a page.
Write the purpose clause to name the specific transaction under evaluation, because a purpose stated as a general business relationship licenses almost any downstream use.
Require the recipient to bind its advisors, affiliates, and subcontractors in writing and to remain responsible for their breaches. A leak through a banker or a subcontractor otherwise sits outside your remedy.
Run a separate and longer clock for trade secrets, since 18 U.S.C. 1839(3) protects that information for as long as it stays secret and a flat three-year term ends the protection early.
Ask for injunctive relief plus return or destruction on demand with a written certification, because money damages are hard to prove once information is out.

Receiving Party Positions:

You want obligations your team can supervise and eventually close out.

Push the definition toward information marked confidential or identified in writing within a set number of days after an oral disclosure, so your people can tell what is covered.
Keep the four standard exceptions for public information, prior knowledge, independent development, and third-party receipt, and resist language that shifts the burden of proving them onto you.
Cap the term for commercial information at the short end of the usual one-to-five-year range and negotiate any trade secret tail as a separate, narrower promise.
Carve archival copies held by legal, compliance, and automated backup systems out of the destruction obligation, since a certification your retention systems cannot support creates a compliance problem of its own.
Confirm the whistleblower and protected-activity carve-outs appear in the text, since the statutes apply whether or not the agreement mentions them and their absence costs the drafter remedies.

NDAs arrive in volume and on the counterparty's paper, often with someone waiting on the answer. GC AI's Playbooks hold your standard positions on purpose, term, exceptions, and carve-outs, while GC AI for Word runs those checks inside the document you are marking up.

Red Flags

A definition of confidential information that reaches all information disclosed by either party, with no marking requirement and no exclusions. A definition that covers everything gives a court little that is workable to enforce, and the standard exceptions exist because a recipient cannot be made to unlearn public facts.
A perpetual confidentiality covenant applied to ordinary commercial information. Trade secret status can run for as long as the information stays secret under 18 U.S.C. 1839(3). An unlimited term on pricing decks and org charts invites a reasonableness fight over the whole clause.
An employee or contractor agreement governing trade secrets that carries no whistleblower immunity notice. Under 18 U.S.C. 1833(b)(3), an employer that omits the notice cannot be awarded exemplary damages or attorney fees in a Defend Trade Secrets Act action against that person.
A confidentiality or non-disparagement provision drafted broadly enough to cover harassment and discrimination claims. The Speak Out Act at 42 U.S.C. 19403 blocks judicial enforcement of a pre-dispute clause in a sexual assault or sexual harassment dispute. California Government Code section 12964.5 makes comparable workplace provisions unenforceable and prescribes carve-out language. The National Labor Relations Board held in McLaren Macomb that offering a severance agreement with sweeping confidentiality and non-disparagement terms violates Section 8(a)(1).
A residuals clause that lets the recipient use whatever its people remember. A clause drafted that way operates as a license to everything the recipient's team retained in unaided memory, which in a technical diligence is most of what mattered.

Non-Disclosure Agreement (NDA) Clause FAQs

What is an NDA?

An NDA, or non-disclosure agreement, is a standalone contract in which one or both parties agree to protect information the other discloses and to use it only for a defined purpose. It is also called a confidentiality agreement, or in life sciences a confidential disclosure agreement.

Does an NDA need to be notarized?

No. An NDA is an ordinary contract, and contract formation turns on mutual assent, consideration, capacity, and a lawful purpose. Notarization is none of those things, and a signed NDA binds without it. A notary verifies who signed, which adds evidentiary weight if a signature is later disputed, so notarizing is a choice about proof and it has no effect on whether the agreement is valid.

Can an NDA stop you from reporting harassment or a suspected violation of law?

No, and several statutes say so directly. Under 18 U.S.C. 1833(b), an individual is immune from trade secret liability for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal. Under the Speak Out Act at 42 U.S.C. 19403, a nondisclosure or nondisparagement clause agreed to before a dispute arises is not judicially enforceable in a sexual assault or sexual harassment dispute, for claims filed on or after December 7, 2022. California Government Code section 12964.5 makes comparable workplace provisions unenforceable and requires specific carve-out language. In McLaren Macomb, decided in February 2023, the National Labor Relations Board held that offering a severance agreement with broad confidentiality and non-disparagement terms violates Section 8(a)(1) of the National Labor Relations Act.

What happens if someone breaks an NDA?

Breach of an NDA is breach of contract, so the disclosing party can sue for damages and usually moves first for an injunction, because disclosure is hard to undo. Where the information qualifies as a trade secret, a misappropriation claim can run alongside the contract claim under the Defend Trade Secrets Act. One drafting detail changes the math: under 18 U.S.C. 1833(b)(3), an employer that left the whistleblower immunity notice out of an agreement governing trade secrets cannot be awarded exemplary damages or attorney fees against that employee.

Can an NDA stop someone from working for a competitor?

An NDA restricts the use and disclosure of information. It does not, by itself, bar someone from taking a job. A non-compete or non-solicitation covenant addresses employment restraints, and state law varies widely.

Related Clauses

This content is for informational purposes only and does not constitute legal advice.