A non-disclosure agreement (NDA), also known as a confidentiality agreement, non-disclosure agreement or non-disclosure agreement, is a contract that guarantees the protection of sensitive information. There is a difference between the general confidentiality agreement and the specific trade secret agreement. While a confidentiality agreement can be used in a variety of contexts - e.g. for collaborations, projects or personnel matters - the trade secret agreement usually relates to specific business transactions, e.g. in negotiations on strategic partnerships or the exchange of know-how.
An NDA is crucial when it comes to protecting valuable information whose unauthorized disclosure could harm a company. A well-drafted NDA ensures that confidential documents, e.g. on product enhancements, are not passed on to competitors. The agreement sets out clear guidelines for the handling of sensitive data and creates legal security.
A technology company is developing new software and wants to negotiate with an investor. Without an NDA, the investor could disclose technical details to unauthorized parties and thus harm the company by losing its competitive advantage. With an NDA, the investor undertakes to use the information only to evaluate the investment. This protects the intellectual property.
NDAs can be one-sided or two-sided: one-sided NDAs oblige only one party to the agreement to maintain confidentiality, while two-sided NDAs require both parties to treat the information confidentially. A letter of intent (LOI) is often signed in advance, which represents a non-binding declaration of intent to negotiate and thus the basis for negotiations. The NDA protects the interests of both parties and strengthens mutual trust by clearly defining which information is considered confidential and how it is to be handled.
Overall, an NDA is an indispensable tool for protecting business secrets and confidential information from unauthorized disclosure - and thus safeguarding a company's strategic position.
It is therefore important to understand the structure of an NDA precisely in order to optimally define all relevant protection mechanisms.
In the following, we take a step-by-step look at the components of an NDA. The examples listed here are only partially taken from a ContractHero contract template and - unless they are taken directly from this template - are for illustrative purposes. However, the template itself can be used in its entirety as a legally sound basis for your own NDAs.
Example: "In order to ensure the confidential exchange of necessary information within the scope of this cooperation, the contracting parties conclude the following agreement. The contracting parties agree that all information obtained by each other in the course of the cooperation shall be treated as strictly confidential and shall not be used outside of this cooperation."
Explanation and note: The preamble describes the purpose of the contract and serves as the basis for the collaboration, such as an intended cooperation or business partnership. It does not deal with the main negotiation or the exact terms of the collaboration itself - these are set out in a separate contract. However, the NDA serves as a basis for the secure exchange of confidential information and ensures that both parties undertake to use this information only within the scope of the planned partnership and not to pass it on to third parties. This creates a clear boundary and protects the confidentiality of the content discussed.
Example: "Confidential information includes all technical, commercial and organizational data that is not publicly known or otherwise accessible. (...) Information is not confidential if it is already in the public domain or has been created without reference to confidential information."
Explanation and note: This section defines exactly which information is considered confidential and which is not. This includes all sensitive information that is only made accessible to a small group of people. It is important here that confidentiality only applies to information that has commercial value and is accompanied by an appropriate need for protection. NDA clauses must also not overshoot the mark; if the economic value is insufficient, a non-compete clause, for example, is inadmissible.
Example:
"The signatories undertake to treat all confidential information as strictly confidential. The confidential information provided or disclosed may only be passed on to those employees, bodies or consultants who have been commissioned with the cooperation of both parties and who have been obliged to maintain confidentiality. Any further use or disclosure to third parties is not permitted unless the contractual partner is legally obliged to publish it."
Explanation and note: This clause obliges the contracting parties to maintain strict confidentiality of the protected information and regulates who may have access to the data. Ideally, such a section should contain clear instructions on how confidential data should be stored in order to prevent misuse and guarantee confidentiality as best as possible.
Example: "The contractual partner is obliged to return - or where appropriate - to destroy or delete all confidential information received, but at the latest after the end of the cooperation."
Explanation and note: The return or destruction of secret information ensures that no sensitive data is used without authorization after the end of the contract. This obligation covers both physical and digital data and is particularly important for the protection of intellectual property or personal data.
Example: "The above obligations apply for the duration of the discussions and beyond, until the expiry of 5 years after the signing of this agreement."
Explanation and note: A clear regulation of the period of validity ensures that the protection of confidential information is also guaranteed after the end of the contract. It may make sense to limit the duration in order to avoid disadvantageous restrictions for one of the contracting parties.
Example: "In the event of a breach of the confidentiality obligation, the contractual partner is obliged to pay a contractual penalty in the amount of XY. In addition, he shall be liable for all damages incurred by ContractHero as a result of the breach."
Explanation and note: Contractual penalties ensure compliance with the NDA and act as a deterrent. The amount stipulated should be reasonable in order to remain legally enforceable. The claim for damages applies if an actual economic loss has been incurred, e.g. through the loss of competitive advantages.
Example: "The contractual partner undertakes not to negotiate with competitors of the information provider during the term of the contract."
Explanation and note: The exclusivity agreement protects against parallel negotiations with competitors and can prevent sensitive information from being passed on indirectly. This is particularly important in negotiations that can result in considerable costs for the information provider.
Example: "Should individual provisions be invalid, this shall not affect the validity of the remaining provisions."
Explanation and note: The severability clause protects the contract if individual provisions are invalid and prevents the entire contract from losing its validity. This creates security and flexibility in contract law.
Example: "This contract is subject to the law of the Federal Republic of Germany. The place of jurisdiction is Berlin."
Explanation and note: If the place of jurisdiction and the applicable legal system are clearly regulated, the enforcement of the contractual conditions is made easier in the event of a dispute and legal certainty is created for both parties.
Example: "The contract enters into force upon signature of the parties."
Declaration and note: The signature of the parties confirms the binding validity of the agreement and the agreement to the provisions. An NDA is not legally binding without the signatures of the parties involved.
Such a structure ensures that all relevant aspects of confidentiality are regulated in detail and that rights and obligations are clearly formulated. A well-formulated NDA not only protects confidential information, but also creates trust between the contracting parties.
Below you will find further information to help you better understand the legal basis and nuances of an NDA.
In Germany, there is no specific legal regulation for non-disclosure agreements (NDAs), but they are subject to the general provisions of contract law in the German Civil Code (BGB). According to Section 126 BGB, no specific form is required for NDAs. This means that NDAs can be concluded verbally, in writing, electronically or by conclusive conduct, provided that no specific legal provisions require a particular form.
Another important legal aspect concerns the burden of proof in the event of a breach of contract. If a contracting party breaches the confidentiality obligation, the burden of proof generally lies with the aggrieved party. It must prove that a breach has taken place and which confidential information has been improperly disclosed. It is therefore ultimately advisable to record agreements precisely and in writing.
As NDAs are often used as pre-formulated contracts, it is important to check whether they fall under the law on general terms and conditions (GTC). According to the provisions of the law on general terms and conditions, all clauses must be formulated clearly and comprehensibly. Deviations from the legal standard are invalid if they are surprising, unclear or unreasonably disadvantageous for the other party.
In summary, an NDA is an indispensable tool for protecting confidential information and business secrets from unauthorized disclosure. When drawing it up, it is important to adhere to clear definitions, confidentiality rules and a clear structure so that all relevant points are covered and legally protected.
With a professional NDA template like the one from ContractHero, you save time, avoid critical gaps and create a uniform basis - customizable for each agreement. ContractHero offers you practical features for this: you can easily create contract templates, sign them digitally and manage them centrally. This gives you an overview at all times and allows you to access all specified details in a targeted manner.
Download our NDA template and start your next collaboration safely!
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