One solution that helps to clarify these issues is a non-disclosure agreement (NDA). This document sets out the rules for handling information deemed confidential and outlines the consequences of its unauthorised use. In the rest of this article, we outline the key points to consider when drafting an NDA.
What is an NDA?
A non-disclosure agreement, referred to as an NDA (Non-Disclosure Agreement), is a written agreement under which the parties undertake to keep certain information confidential and not to use it in any way beyond the purposes specified in the agreement. The purpose of entering into such an agreement is to establish legally binding rules for the protection of confidential information, in particular that which is of significant economic importance to the business, and to limit the risk of its disclosure to third parties or competitors.
An NDA can take various forms, depending on the nature of the relationship between the parties. In practice, it most commonly takes the form of:
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A unilateral undertaking – where confidential information is disclosed by only one party, and the other party undertakes to keep it confidential,
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A bilateral agreement – where each party discloses confidential information to the other and simultaneously undertakes to protect it.
When is it worth signing an NDA?
A non-disclosure agreement is applicable in many situations related to the conduct of business, in particular:
- during commercial negotiations and strategic discussions with potential business partners, investors or suppliers,
- in connection with the implementation of innovative projects, including research and development projects,
- when establishing cooperation with employees, consultants and contractors who, in the course of their duties, may gain access to confidential information,
- in relations with third parties to whom company information is entrusted or who are involved in its processing.
Importantly, an NDA should be concluded before the exchange of confidential information begins, so as to ensure effective legal protection from the very start of the cooperation.
Key elements of an effective NDA
For a non-disclosure agreement to effectively fulfil its protective functions, it should contain both basic elements and supplementary provisions, tailored to the nature of the legal relationship in question. The key elements of an NDA include, in particular:
- Precise identification of the parties to the agreement
Every agreement must clearly specify who undertakes to maintain confidentiality and who discloses the information.
- A precise definition of confidential information
A key element of an NDA is the precise definition of the scope of information covered by the protection. A definition that is too general or overly broad may lead to difficulties in interpretation and, consequently, undermine the effectiveness of the protection, whilst a definition that is too narrow may fail to cover all information of significant economic importance. It is also advisable to explicitly identify in the agreement the categories of information excluded from the confidentiality regime, such as data that is publicly available or disclosed under applicable law.
- Scope and limitations of obligations
The agreement should clearly define the obligations of the party receiving confidential information, including the permissible purposes for its use, the required protective measures, and the circle of persons who may have access to it within that party’s organisational structure.
- Duration of confidentiality
Another key element is specifying the duration of the confidentiality obligation. This obligation may apply for the duration of negotiations or cooperation, as well as for a specified or unspecified period after their conclusion, depending on the nature and significance of the protected information.
- Consequences of breaching the agreement
A properly drafted NDA should provide for the consequences of a breach of the confidentiality obligation, including the possibility of stipulating contractual penalties and claiming damages. These provisions serve an important preventive function, strengthening the incentive to comply with the agreed obligations.
Exceptions and limitations to the application of an NDA
A non-disclosure agreement does not cover information which, at the time of its disclosure, is in the public domain or which will become publicly available independently of the parties’ actions. The provisions of an NDA may not, furthermore, lead to the exclusion or limitation of obligations arising from mandatory provisions of law, nor may they oblige the parties to act unlawfully.
It should also be emphasised that an NDA does not replace data protection regulations. In cases where personal data is processed, separate legal instruments must be used, such as a data processing agreement.
Summary
A non-disclosure agreement is one of the legal instruments used to protect trade secrets, setting out rules for handling information relevant to business operations, such as know-how, technological solutions, business strategies or financial data. A properly drafted NDA helps to limit the risk of unauthorised use of confidential information, clearly defines the rules for cooperation with partners, contractors or employees, and provides a basis for taking action in the event of a breach of the agreed confidentiality rules. In practice, an NDA is not merely a formal element of negotiations or business cooperation, but one component of a broader information protection system which — when properly applied — can effectively support an entrepreneur’s legal security. It is worth bearing in mind that an NDA drafted or reviewed in consultation with a lawyer allows its content to be better tailored to the specific nature of the business and effectively enhances the level of protection for confidential information.
She specializes in civil, commercial and business law. In the corporate and energy department, her activities are mainly based on providing corporate services to companies, reviewing and preparing commercial contracts, drafting litigation and non-litigation pleadings and preparing analyses and legal opinions, particularly in the sphere of business law and energy law. She also has professional experience in administrative and civil proceedings, which she gained in Warsaw law firms. She supports the Firm's…
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