Question 1

When do I need an NDA?

Accepted Answer

Before sharing anything you wouldn't want a competitor to know — business plans, customer lists, financial data, proprietary methods, unreleased product details. You need one before hiring contractors, entering partnerships, pitching to investors (some will refuse to sign, and that's their right), or discussing M&A.

Question 2

Will investors sign an NDA?

Accepted Answer

Most won't — and asking can actually hurt you. VCs and angel investors see hundreds of pitches. Signing NDAs for each one creates legal exposure they can't manage. The exception: once due diligence starts and they're reviewing financials and customer data, an NDA is standard. Don't let the fear of sharing an idea stop you from pitching.

Question 3

How long should an NDA last?

Accepted Answer

2–5 years for general business information. Indefinitely for trade secrets (like proprietary formulas or algorithms). The duration should match the value of the information — a product launch date only matters for months, while a manufacturing process could be valuable for decades. Match the term to the secret.

Question 4

What happens if someone violates an NDA?

Accepted Answer

You can sue for breach of contract and seek damages (the financial harm caused by the disclosure) and an injunction (court order to stop sharing). The challenge is proving the breach and quantifying the damage. If your secret leaked and a competitor used it, what's that worth? This is why NDAs should include liquidated damages or clearly define how damages are calculated.

Question 5

What's the difference between a mutual and a one-way NDA?

Accepted Answer

A mutual NDA protects both parties — each side agrees to keep the other's information confidential. A one-way NDA protects only the disclosing party. Use mutual when both sides are sharing secrets (partnerships, collaborations). Use one-way when only you're sharing (hiring a contractor, engaging a service provider).

Question 6

Can an NDA prevent someone from working in the same industry?

Accepted Answer

No — that's a non-compete, not an NDA. An NDA restricts information sharing, not employment. If your NDA is so broad that it effectively prevents someone from working anywhere in their field, a court might narrow its scope or throw it out entirely. Keep NDA restrictions focused on specific information, not entire industries.

NDA (Non-Disclosure Agreement)

Definition

In Practice

Common in these contract types

Related terms

Frequently asked questions about nda (non-disclosure agreement)

Create a contract with proper nda (non-disclosure agreement) clauses