What Is a Non-Disclosure Agreement (NDA) or Confidentiality Agreement (And When Do You Need One)?
- Jackie Atchison
- Apr 21
- 3 min read
Intro
You’re discussing something sensitive—client data, a business idea, financials, or commercial terms—and you want to make sure it stays private. That’s where a confidentiality agreement comes in.
This post explains what a confidentiality agreement does, when you should use one, and what to include to ensure it actually holds up.
Why It Matters
Confidentiality agreements and NDAs are used to protect information that’s not meant to be shared. But vague or poorly worded agreements may not be enforceable—and relying on goodwill isn’t always enough.
If you’re sharing sensitive business information, you want clear legal protection.
What You Need to Know
What’s the Difference Between an NDA and a Confidentiality Agreement?
Although both Non-Disclosure Agreements (NDAs) and Confidentiality Agreements aim to protect sensitive information, there are key differences:
Non-Disclosure Agreement (NDA) - Typically used in specific situations where one party shares confidential information with another, such as in business partnerships or employment. NDAs focus primarily on preventing the disclosure of proprietary information to third parties.
Confidentiality Agreement - A broader term that includes any agreement requiring confidentiality, not limited to business dealings. It may cover ongoing obligations of confidentiality in sectors like healthcare, legal professions, and intellectual property.
While an NDA is a specific type of confidentiality agreement, Confidentiality Agreements can be used more generally and often have a longer-term or wider scope.
When You Should Use an NDA or Confidentiality Agreement
You should consider using an NDA or Confidentiality Agreement when:
Discussing a potential business deal or joint venture
Pitching an idea to investors or partners
Sharing client data or trade secrets with contractors or collaborators
Giving someone access to systems, processes, or reports
Hiring employees or freelancers with access to sensitive material
| Tip: If you’re asking someone to “keep it confidential,” but haven’t put anything in writing, you may not be protected.
What Should an NDA or Confidentiality Agreement Cover
A good NDA or Confidentiality Agreement should clearly set out:
What information is considered confidential
How the information can (and can’t) be used
Who it can be disclosed to (e.g. staff, advisors)
How long the obligation lasts
What happens if there’s a breach
It should also cover how information is stored, returned, or destroyed after the relationship ends.
One-Way vs Mutual
Not all NDAs are the same. If only one party is disclosing information, a one-way agreement may be enough. If both sides are sharing confidential material, you’ll want a mutual agreement.
This matters because it affects the obligations and liability each party has.
Enforcement and Practical Risk Management
While an NDA or Confidentiality Agreement will usually provide a legal remedy if confidential information is misused, enforcing them can be costly and time-consuming. Litigation should be a last resort—not your only safeguard.
That’s why it’s worth taking extra steps to reduce your exposure when sharing sensitive material. For example:
Use time-limited links to documents or folders
Limit access to only the information that’s necessary
Share screenshots instead of editable documents or code
Track when and how information is accessed
These measures reduce the likelihood of a breach—and can limit the damage if one occurs.
| Worth Knowing: Some professionals - like lawyers and accountants - have a professional obligation to keep information confidential. Not only is an NDA or Confidentiality Agreement not really necessary in these cases, failure to comply with the professional obligation usually carries greater risk and penalty than failure to comply with an NDA or Confidentiality Agreement will.
Commercial Insight
NDAs and Confidentiality Agreements aren’t about paranoia—they’re a practical tool for managing risk. Most people don’t set out to misuse your information, but clear legal boundaries help prevent mistakes and give you options if something goes wrong.
They also send a clear message: this information is sensitive, and it matters.
What to Do Next to Decide Whether You Need a NDA or Confidentiality Agreement
Think about whether you’re sharing anything you wouldn’t want made public
Have a short, readable NDA ready to go for common situations
Make sure the language is specific—not just generic legal phrases
Get legal advice if you’re dealing with a complex or high-value matter
Closing Wrap
I help businesses put NDAs and Confidentiality Agreements in place that actually protect what matters—and show you how to reduce your risk when sharing sensitive information. If you’re looking to safeguard ideas, data or commercial discussions, I can help you get it right.
