Non-disclosure agreement (NDA)

What it is and when it is used

A non-disclosure agreement (NDA), also called a confidentiality agreement, is a contract under which one business shares sensitive information with another and the recipient promises to keep it confidential. In the Dealroom template the information is shared for a defined "Purpose": evaluating or pursuing a potential business relationship between the parties.

NDAs are typically signed before early talks about a partnership, due diligence before an investment or acquisition, or any relationship where one side needs to see non-public information.

Mutual or one-way. The difference:

• In a one-way NDA, one side discloses and the other side receives. Only the receiving side takes on duties of secrecy.
• In a mutual NDA, both sides disclose, so each is both a disclosing and a receiving party, and each protects the other's information.

The Dealroom NDA is drafted as a one-way agreement. The preamble names a Disclosing Party and a Receiving Party, and the core duties (keep the information secret, use it only for the Purpose, return or destroy it at the end) are placed on the Receiving Party. Some terms bind both sides equally (non-solicitation, assignment, the "balanced" remedies option and the right to end the agreement on notice), but there is no setting that converts the document into a fully mutual NDA, so the roles should match the way information will actually flow.

Who signs it and in which role

Two parties sign, each identified by its legal name and principal place of business:

• Disclosing Party: the business that owns the confidential information and shares it. The definition extends to its officers, directors, employees, agents and authorised representatives.
• Receiving Party: the business that receives the information and takes on the duty of confidentiality, with the same extension to its own people.

"Representatives" (affiliates, staff and advisors such as lawyers and accountants) are also defined, and the Receiving Party answers for their breaches. Electronic signatures count as originals. Dealroom can run the NDA as a two-party negotiation or in solo mode, where one side sets the terms alone.

Key clauses

Definition of confidential information

This clause decides what is protected. The options are: only information marked "confidential" or "proprietary"; marked information plus anything that would reasonably be understood as confidential given its nature or the circumstances; or all non-public information, however it is disclosed and whether or not it is marked.

Excluded information

A fixed clause removes four kinds of information from protection: information that is or becomes public without a breach, information the Receiving Party already knew without restriction, information it developed independently, and information received from a third party who was free to share it. The burden of proving an exclusion rests on the Receiving Party.

Confidentiality obligations and permitted disclosures

The Receiving Party must keep the information in strict confidence, use it only for the Purpose, and protect it with at least the care it uses for its own similar information (never less than reasonable care). The permitted disclosures clause then sets who else may see it, from "only when the law requires it" up to affiliates and potential business partners.

Confidentiality duration and agreement term

These are separate. The agreement term (1, 2 or 3 years, ending early on 30 days' written notice, or 60 days for the 3-year option) is the period in which new information can be shared. The confidentiality duration (2, 3 or 5 years after the end, or indefinitely for information that qualifies as a trade secret) is how long the duty of secrecy survives.

Return or destruction of information

At the end, the Receiving Party must return or destroy the information. The options range from destruction within 10 business days with written certification, to destruction within 30 days with one archival copy kept for legal compliance, to destruction within 30 days of readily accessible copies while routine backups may stay untouched.

Remedies for breach

The options let the Disclosing Party seek an injunction without proving actual damages, add that no bond is required (where the law allows), or keep a balanced clause under which either party may pursue any remedy, including damages and injunctions where appropriate.

Non-solicitation of employees

Optional: neither party directly solicits the other's employees met through the Purpose, during the term or for one year after.

Assignment rights

This decides whether a party can transfer the agreement: never without consent, to affiliates under common control, or also in a merger, acquisition or sale of substantially all assets. Restricting assignment protects against disclosure to an acquiring company.

Governing law and disputes

The governing law follows the jurisdiction chosen for the deal; the forum is negotiable. Options include the default courts of that jurisdiction, several arbitration institutions, and a custom law and forum.

Standard terms

Fixed clauses confirm that no licence or ownership passes to the Receiving Party, that the information is provided "as is" without warranty, and that a Receiving Party compelled by a court or authority must notify where lawful, cooperate and disclose only what is required.

What the two sides usually negotiate

The Disclosing Party wants wider, longer protection; the Receiving Party wants clear limits and an end date. Where they disagree, Dealroom proposes the most neutral option as the middle ground:

• Definition: marked only (favours the Receiving Party) against all non-public information (favours the Disclosing Party). Middle ground: marked information plus what would reasonably be understood as confidential.
• Permitted disclosures: legal requirement only (Disclosing Party) against affiliates and partners (Receiving Party). Middle ground: legal requirement plus professional advisors.
• Confidentiality duration: 2 years (Receiving Party) against 5 years or perpetual for trade secrets (Disclosing Party). Middle ground: 3 years.
• Agreement term: 1 year against 3 years. Middle ground: 2 years.
• Return or destruction: strict 10-day destruction (Disclosing Party) against a backup exception (Receiving Party). Middle ground: 30 days with one archival copy for legal compliance.
• Remedies: injunction without bond (Disclosing Party) against all remedies for both sides. The balanced option is the middle ground.
• Non-solicitation: none (Receiving Party) against term plus one year (Disclosing Party). The "during the term only" option sits nearest the middle.
• Assignment: no assignment (Disclosing Party) against affiliates plus mergers (Receiving Party). Middle ground: affiliates only.

The dispute resolution options are all neutral between the parties; the choice there turns on cost, privacy and convenience rather than on who benefits.

Jurisdictions and languages

Dealroom offers the NDA under the law of California, England and Wales and Spain, in English and Spanish. Each jurisdiction adds its own provisions:

• California: the California Uniform Trade Secrets Act applies alongside the agreement; injunctive relief without a bond; a jury trial waiver; and compliance with the CCPA and CPRA for any personal information. Delaware courts, JAMS and AAA arbitration are offered here.
• England and Wales: third parties cannot enforce the agreement under the Contracts (Rights of Third Parties) Act 1999; liability for fraud, death or personal injury caused by negligence is not excluded; equitable relief is available; and UK GDPR applies to personal data. LCIA arbitration is offered here.
• Spain: Law 1/2019 on Trade Secrets applies alongside the agreement; the good faith and interpretation rules of the Civil Code are referenced; and GDPR and LOPDGDD apply to personal data. Spanish courts, mediation under Law 5/2012 followed by courts, and Madrid Arbitration Court proceedings are offered here. For the Spanish court options the user fills in the city of the competent courts (Madrid by default), typically the registered office of the Disclosing Party.

ICC arbitration and the custom law and courts option are available in all three. With the custom option, the parties write in their own governing law and courts.

Common mistakes

• Using the wrong structure. If both sides will share sensitive material, a one-way document protects only one of them. The parties and the direction of disclosure should be stated clearly.
• A narrow definition with oral disclosures. A marking requirement gives clarity but may miss information shared in meetings or calls.
• Confusing the term with the confidentiality period. Ending the agreement stops new disclosures; it does not end the duty to keep earlier information secret.
• Perpetual protection without a trade secret. The skill flags perpetual or very long confidentiality without justification. The perpetual option applies only to information that qualifies as a trade secret, which may have to be proved.
• No retention exception. Full destruction may conflict with legal retention requirements; the archival copy option addresses this.
• Non-solicitation in California. These clauses are generally unenforceable there; the post-term version is not offered.
• Overlooking the forum. Court proceedings are public, which matters in a dispute about confidential information; arbitration is private but usually final, with limited appeal.

# 1. Read the clauses, options and the facts it needs
curl https://dealroom.todo.law/api/v1/agent/templates/NDA \
  -H "Authorization: Bearer drk_YOUR_KEY"

# 2. Create the contract (clauses you leave out take the default option)
curl -X POST https://dealroom.todo.law/api/v1/agent/deals \
  -H "Authorization: Bearer drk_YOUR_KEY" \
  -H "Content-Type: application/json" \
  -H "Idempotency-Key: $(uuidgen)" \
  -d '{
    "schema": "dealroom.solo-intake/1",
    "contractType": "NDA",
    "governingLaw": "ENGLAND_WALES",
    "language": "en",
    "dealName": "Example NDA",
    "selectionPolicy": "defaults"
  }'