What Is an NDA? Non-Disclosure Agreements Explained

A non-disclosure agreement (NDA), also called a confidentiality agreement, is a contract in which one or both parties agree to keep specified information confidential and to use it only for an agreed purpose. A one-way NDA protects one side's information; a mutual NDA protects both. NDAs are common in hiring, deal talks, vendor relationships and settlements. They're enforceable as contracts, but federal law limits them: they can't stop you from reporting possible securities violations to the SEC, they can't be used to block certain whistleblower disclosures of trade secrets, and pre-dispute NDAs can't be enforced in sexual harassment or assault disputes.

At a glance

One-way vs. mutual NDAs

• One-way (unilateral): only one party shares confidential information; the other promises not to disclose or misuse it. Common when a company hires an employee or talks to a vendor.
• Mutual: both sides share information and both promise confidentiality. Common in merger talks, joint ventures and settlements.

Key clauses, explained

• Definition of confidential information: what counts (documents, data, know-how) and what doesn't.
• Permitted use: use only for the stated purpose (evaluating a deal, doing the job).
• Who can receive it: employees, advisors or affiliates who need it and are bound to protect it.
• Standard exclusions: information that is public, already known, independently developed, or that must be disclosed by law.
• Term: how long the duty lasts; trade secrets may be protected as long as they stay secret.
• Return or destruction: what happens to copies when the relationship ends.
• Remedies: often injunctive relief and damages for breach.

What an NDA can't do

Federal law sets hard limits:

• SEC whistleblowing. SEC Rule 21F-17(a) makes it unlawful for anyone to take action to impede a person from communicating with the SEC staff about a possible securities-law violation, including by enforcing or threatening to enforce a confidentiality agreement.
• DTSA immunity and notice. Under 18 U.S.C. §1833(b), a person may disclose a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing under seal. An employer that doesn't give notice of that immunity in an employee contract covering trade secrets or confidential information can't get exemplary damages or attorney fees under the DTSA against that employee; "employee" includes contractors and consultants.
• Speak Out Act. The Speak Out Act (42 U.S.C. §§19401–19404) makes pre-dispute nondisclosure and nondisparagement clauses judicially unenforceable in sexual assault and sexual harassment disputes. The Act keeps protection for trade secrets and proprietary information.

If an NDA is breached

A breach is usually a contract claim: injunctive relief and damages. When trade secrets are involved, the Defend Trade Secrets Act also allows civil remedies in federal court, including an injunction that can't bar someone from taking a job based merely on what they know, damages, and — for willful and malicious misappropriation — exemplary damages up to two times actual damages and attorney fees (18 U.S.C. §1836(b)(3)). See What Is Trade Secret Misappropriation?.

NDA vs. non-compete

An NDA restricts use and disclosure of confidential information. A non-compete restricts where or for whom you can work. They serve different purposes and face different enforceability rules. For executives comparing the two, see NDA vs. Non-Compete for Executives and What Is a Non-Compete Agreement?.

Questions to ask a lawyer before you sign

• What information is covered, and what is excluded?
• Is this one-way or mutual, and does that match who is sharing?
• How long does the duty last?
• Does the agreement include the DTSA immunity notice if it covers trade secrets?
• Does anything in it conflict with SEC Rule 21F-17 or the Speak Out Act?
• What happens if I need to report wrongdoing or respond to a subpoena?

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Related questions

• NDA vs. Non-Compete for Executives
• What Is Trade Secret Misappropriation?
• What Is a Non-Compete Agreement?
• What Is a Severance Agreement?
• What Is Garden Leave?

FAQ

Is an NDA legally binding?
Yes, if it meets the usual contract requirements (offer, acceptance, consideration and definite terms). Enforceability still depends on the wording and on federal limits described above.

What's the difference between an NDA and a confidentiality agreement?
They're generally the same thing. Courts and businesses use both names for contracts that restrict disclosure of confidential information.

Mutual or one-way?
One-way protects only the disclosing party's information. Mutual protects both sides when both share information.

How long does an NDA last?
Whatever the contract says. Some run for a set term; duties tied to true trade secrets often last as long as the information stays secret.

Can an NDA stop me from reporting to the SEC or the government?
An NDA can't impede communications with the SEC about possible securities-law violations (Rule 21F-17(a)). The DTSA also protects certain confidential disclosures of trade secrets to report suspected law violations. Pre-dispute NDAs can't be enforced in sexual assault or sexual harassment disputes under the Speak Out Act.

What happens if I break an NDA?
You can face a breach-of-contract claim (damages and injunctions). If trade secrets are involved, the DTSA can add further remedies, including exemplary damages up to 2× and attorney fees for willful and malicious misappropriation.

Is an NDA the same as a non-compete?
No. An NDA restricts disclosure and use of confidential information. A non-compete restricts where you can work.

Are NDAs enforceable in harassment cases?
Pre-dispute nondisclosure and nondisparagement clauses are judicially unenforceable in sexual assault and sexual harassment disputes under the Speak Out Act. Trade secrets and proprietary information can still be protected.

Sources

• 18 U.S.C. §1833 (exceptions; whistleblower immunity and notice), Cornell LII, fetched Oct. 31, 2026
• 18 U.S.C. §1836 (civil proceedings; remedies), Cornell LII, fetched Oct. 31, 2026
• 42 U.S.C. §§19401–19404 (Speak Out Act), Cornell LII, fetched Oct. 31, 2026
• 17 CFR §240.21F-17 (SEC staff communications), Cornell LII / eCFR, fetched Oct. 31, 2026

*This information is general and isn't legal advice. It doesn't create an attorney-client relationship. Talk to a lawyer about your situation.*