A Non-Disclosure Agreement (NDA) is one of the most common legal documents in business. Whether you are sharing a business idea with a potential partner, hiring a contractor with access to sensitive data, or entering a joint venture, an NDA protects your confidential information from being disclosed to third parties. This guide explains what an NDA is, the different types, the key clauses to include, and how to create and send one using SignAndGo's free NDA template.
What is a Non-Disclosure Agreement?
An NDA (also called a confidentiality agreement, confidential disclosure agreement, or CDA) is a legally binding contract between two or more parties that outlines confidential information they wish to share with each other but restrict from being shared with anyone else.
In plain terms: it is a formal promise to keep secrets. The party receiving confidential information agrees not to disclose it to third parties, not to use it for purposes outside the agreed scope, and to take reasonable steps to protect it.
NDAs are enforceable under Australian contract law. If a party breaches an NDA, the disclosing party can seek damages, injunctions, or other legal remedies.
Mutual vs One-Way NDAs
There are two main types of NDAs, and choosing the right one depends on your situation:
Mutual NDA
Both parties share confidential information with each other, and both agree to protect the other's information. This is the most common type for:
- Joint ventures and partnerships
- Merger and acquisition discussions
- Technology collaborations
- Business negotiations where both sides share proprietary data
One-Way NDA
Only one party discloses confidential information, and the other party agrees to keep it confidential. Common for:
- Hiring employees or contractors
- Pitching ideas to investors
- Sharing business plans with advisors
- Engaging consultants or freelancers
When in doubt, use a mutual NDA. It provides equal protection for both sides and is generally viewed more favourably in negotiations — no one likes being the only party with obligations.
Key Clauses Every NDA Should Include
A well-drafted NDA should contain the following essential clauses:
1. Definition of Confidential Information
This is arguably the most important clause. It defines exactly what information is covered by the NDA. Be specific — a vague definition can make the NDA unenforceable. Include categories like trade secrets, business plans, financial data, customer lists, technical specifications, source code, and marketing strategies.
2. Obligations of the Receiving Party
Spell out what the receiving party must do: keep the information confidential, limit access to those who need to know, use the information only for the stated purpose, and take reasonable security measures to protect it.
3. Exclusions from Confidentiality
Standard exclusions include: information that was already publicly known, information the receiving party already possessed, information received from a third party without restriction, and information independently developed by the receiving party.
4. Duration / Term
How long does the NDA last? Common terms range from 1 to 5 years. Some NDAs remain in effect indefinitely for trade secrets. Consider what is reasonable for your situation — a 10-year NDA for a simple freelance project may be viewed as excessive.
5. Return or Destruction of Information
What happens when the relationship ends? The NDA should require the receiving party to return or destroy all confidential materials upon request or at the end of the term.
6. Remedies for Breach
Outline the consequences of a breach. This typically includes the right to seek injunctive relief (a court order to stop the breach) and damages. Acknowledge that a breach may cause irreparable harm for which monetary damages alone are insufficient.
7. Governing Law and Jurisdiction
Specify which state or territory's laws govern the agreement and where disputes will be resolved. For Australian businesses, this is typically the state where the disclosing party is based.
Using SignAndGo's Free NDA Template
SignAndGo includes a professionally drafted NDA template in its template library. Here is how to use it:
- Browse the template library. From your SignAndGo dashboard, go to Templates and find the Non-Disclosure Agreement. You can choose between mutual and one-way versions.
- Customise with AI. SignAndGo's AI assistant, Sharna, will customise the template with your company details — your business name, ABN, address, and the specific confidential information you want to protect. No manual editing of legal language required.
- Review the generated document. The AI produces a complete, formatted PDF ready for signing. Review it to ensure all details are correct.
- Add recipients. Enter the email address of the person who needs to sign. Add a personal message explaining the context if you like.
- Send for signing. The recipient receives an email with a secure link. They review the NDA and sign it directly in their browser — no account needed.
- Download and store. Once signed, the completed NDA with audit trail is available for download from your dashboard.
Legal Disclaimer
SignAndGo's NDA templates are designed for general business use and are drafted in accordance with Australian law. However, they are not a substitute for legal advice. If you are dealing with high-value intellectual property, complex multi-party arrangements, or industry-specific regulations, we recommend having a lawyer review your NDA before sending.
Common NDA Mistakes to Avoid
Even with a good template, there are pitfalls to watch for:
- Being too vague about what is confidential. If the definition is too broad ("all information shared between the parties"), it may be unenforceable. Be specific about categories and types of information.
- Setting an unreasonable duration. A 20-year NDA for a casual consulting engagement will raise eyebrows and may not hold up. Match the term to the sensitivity and shelf life of the information.
- Forgetting to include exclusions. Without standard carve-outs (publicly known information, independently developed information), the NDA becomes overbroad and potentially unenforceable.
- Not specifying the purpose. The NDA should state why the information is being shared and limit its use to that purpose. Without this, the receiving party may have broader rights than you intended.
- Using a one-way NDA when mutual is appropriate. This can create an imbalance of power that makes the other party reluctant to sign. When both parties are sharing information, use a mutual NDA.
- Not actually sending it. The most common mistake of all — having an NDA template but never getting around to sending it because the process is too cumbersome. This is exactly why platforms like SignAndGo exist: to make it so easy that there is no excuse not to.
When Do You Need an NDA?
Consider using an NDA in these situations:
- Hiring employees or contractors who will access proprietary systems or data
- Discussing a potential partnership, merger, or acquisition
- Sharing business plans, financial projections, or customer data with advisors
- Engaging a freelancer for creative or technical work involving trade secrets
- Pitching your startup idea to investors or potential co-founders
- Sharing proprietary software, designs, or processes with a third party
- Onboarding a new supplier who will handle sensitive customer information
The rule of thumb: if you are about to share something you would not want a competitor to know, you need an NDA first.