How to Use NDAs Without Putting People Off

Non-disclosure agreements come in for a lot of criticism in the press, due to the way that they have been abused in employment and harassment cases.  But used properly, they are an extremely important tool.

In business, information is power. Whether it’s a new product idea, a client list, a pricing model, or a marketing strategy — keeping sensitive information private can be critical to your competitive edge. That’s where Confidentiality Agreements (often called NDAs – Non-Disclosure Agreements) come in.

But when should you actually use one? And how do you make sure it does what you need it to? In this post, we’ll break down the key things SMEs need to know about confidentiality agreements, and how to use them to protect your business.

What Is a Confidentiality Agreement?

A confidentiality agreement is a legal contract between two or more parties where at least one party agrees not to disclose certain information shared during the course of a relationship or transaction.

These agreements are enforceable in court — meaning if someone breaches the terms and leaks your confidential information, whether in error or deliberately, you may be able to sue for damages or get an injunction to stop further disclosure.

Why Use a Confidentiality Agreement?

These agreements help protect information that isn’t public — including:

              •            Business ideas or inventions

              •            Client databases or supplier contacts

              •            Pricing or marketing strategies

              •            Financial information

              •            Know-how, systems or processes

              •            Software code or algorithms

              •            Pitch decks or proposals

If the information is commercially valuable and not publicly available, it probably warrants protection.

When Should SMEs Use NDAs?

NDAs are particularly useful in situations like:

• Pitching to potential investors or partners,  as you’ll likely need to share financials or strategic plans that you wouldn’t want shared more widely.

• Hiring freelancers or consultants.  External professionals often need access to confidential materials — a good NDA helps ensure they treat your information with care.

• Discussing potential mergers, acquisitions, or joint ventures.  These discussions are highly sensitive and usually involve sharing financial records and business strategy.

• Employee relationships.  You may include confidentiality clauses in employment contracts, especially for senior staff or those with access to key business data.

• Early-stage product development.  Whether it’s a prototype or business method, NDAs can help prevent premature leaks or copycats.

What Should Be Included in a Confidentiality Agreement?

A good NDA will clearly define:

• What information is confidential.  Be as specific as possible. Define what is protected and, importantly, what isn’t, like information already in the public domain.

• How the information can be used.  Limit use of the information to a particular purpose, like a specific product development.

• How long the obligations last.  Typical durations range from 1 to 5 years, but sensitive materials might warrant longer protection.

• Who the information can be shared with.  You might allow disclosure to employees or advisers — as long as they’re bound by the same duty of confidence.

• Consequences of a breach.  Include the right to seek damages or injunctive relief if the agreement is broken.

Types of NDAs

There are two main types:

• A one-way NDA, where one party is disclosing information and the other is agreeing to keep it confidential.   These are common when working with contractors, advisors, or employees.

• A mutual NDA, where both parties are sharing confidential information — useful in joint ventures, collaborations, or partnership negotiations.

Are NDAs Always Enforceable?

NDAs are enforceable under UK law if they’re clearly written and reasonable in scope. However, courts won’t enforce clauses that are too broad, too vague, or overly restrictive.

NDAs can’t prevent whistleblowing or reporting criminal behaviour, and they don’t last forever. The information still has to be genuinely confidential — and you must treat it as such, as well as expecting the other party to do so.

Common Mistakes to Avoid

              •            Using generic or unclear templates

              •            Forgetting to get the agreement signed before sharing information

              •            Failing to limit who can access the confidential data

              •            Not including provisions for returning or destroying materials

Do I Always Need a Professional to Draft an NDA?

Not necessarily — but getting expert support helps ensure your agreement does what you intend. If you’re sharing particularly sensitive or valuable information, it’s worth the small investment.

How We Can Help

At Your Legal Team, we regularly draft and review confidentiality agreements for businesses of all sizes. Whether you need a robust NDA for a one-off meeting, or want to incorporate confidentiality protections into your standard contracts and policies, we can help you get the legal cover you need — without slowing your business down.