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What is an NDA? Pros, cons, and uses

A non-disclosure agreement (NDA) is a contract between parties to ensure confidentiality. These legally-binding documents are common in business or employment but apply almost anywhere.

Sound like a boring legal process? Think again! The purpose of NDAs is to protect information—you need them to create the legal framework for people to work with each other in confidence.

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Think of the most exciting moments in news and popular culture—from the season finale of your favorite show, to surprise Coachella sets that go down in history. NDAs make all of this possible by protecting key information from exposure to the general public.

As well as being useful for creative projects, NDAs play an important role in business. Say a tech giant is releasing their new flagship product, an NDA ensures that everybody working on the project sticks to strict confidentiality.

Ultimately, an NDA is just a contract—and contracts need signing. With Dropbox, sending and signing NDAs is as simple as sending an email. You can try it yourself with DocSend.

NDA definition and other names

Non-disclosure agreements, sometimes called confidentiality agreements, privacy agreements, or similar, are contracts that stop people from sharing information without permission.

Although there are several terms for NDAs and dozens of uses, they all deliver the same thing—a legally-binding framework for keeping information within a select group. They’re pretty simple!

Non-disclosure agreement (NDA) template

Do you think you need an NDA? Use our free non-disclosure agreement template and make one now.

What are NDAs used for?

We’ve touched on a couple of areas where NDAs are practical, but why are they useful? NDAs exist to protect sensitive or proprietary information, so here are some areas they’re useful:

Business relationships

Business relationships include a freelancer/solopreneur forming a partnership with a fellow professional—but also larger organizations coming together in a joint venture.

Examples of where an NDA is useful include protecting financial information, marketing strategies, product data, and other top-secret stuff.

Employer/employee relationships

If you’re a new employee or leaving a company—perhaps even when working as a contractor or consultant—it’s pretty standard to sign an NDA.

NDAs help with protecting customer lists, stopping sharing of proprietary detail (like a protected recipe or formula), and other things a competitor might want.

Startups/funding agreements

Using an NDA after a successful pitch or round of seed funding is common. Potential investors want to protect the specifics of the product (or idea) they are buying.

An NDA prevents a confidential business plan, financial projections, or emerging technology from getting into the wrong hands.

Mergers and acquisitions

There are lots of moving parts during M&A to help close the deal—these terms and conditions are ideal for protecting with NDAs.

NDAs also help build trust during wild periods of flux—where people have to share sensitive data, intellectual property, and key business details.

Research and development

Many organizations that develop groundbreaking things rely on contractors or suppliers for equipment and other stuff essential to the goal.

NDAs stop trade secrets, patents, and technology from getting out before a company is ready to go public. This allows time for trademarks, registrations, and more.

Medical, legal, and professional services

Any service vendor who holds confidential details needs to use an NDA to establish trust with a client and protect themselves.

Legal protection stops data transmission, which prevents bad actors from potentially exploiting this—and stops any threat to the safety or privacy of clients and patients.

Inventors, disruptors, and entrepreneurs

Remarkable people have to work with others to get their ideas off the ground, so they 100% want legal protection to avoid scuppering their ideas.

An NDA is a godsend for the next world changer, as it keeps intellectual property and inventions confidential until the person has all the patents or protections in place.

Type of NDA How it works
Unilateral A one-way NDA, usually used by large organizations—such as for employees—to stop the person from disclosing any details about a single party.
Bilateral A two-way NDA, which is useful for partnerships between small businesses and professionals. Bilateral NDAs are common in agreements where both parties want to ensure confidentiality.
Multilateral This is a special type of NDA for where exclusions apply, but only in certain situations—such as a doctor disclosing details of a patient to an insurance company.

Consider an NDA—one of the most powerful legal documents in America

Had a pitch gone well, almost too well? Got a new idea you’re desperate to share but among confidantes only? You can try out our free Paper template and put your own NDA together.

A person clicks a checkbox that adds an NDA to their file in DocSend.
Creating, sending, or signing NDAs in a single click with DocSend are some of the features people value most from this amazing product. See what one professional user has to say about it below:

DocSend lets us send NDAs, onboard new consultants, fundraise, and close convertible notes all from one platform. Adding a one-click NDA to pitch decks has given us an added level of security, which helped us securely close our seed round.

Jonathan Newar, CEO, Captain Experiences

Securely send and sign NDAs in just one click with DocSend

NDAs might seem complex but they are a simple part of your workflow, it’s as easy as sending an email. By using Dropbox, you can harness the power of a legally-binding signature without a pen!

With DocSend, you can create, share, and sign legally-binding NDAs in a few clicks. Just choose a document and select Require NDA to view on any document link. Try it for free and send one now.