Non-disclosure agreement (NDA): types, when to use each, and how to manage them

A non-disclosure agreement (NDA) is a legally binding contract that obliges one or more parties to keep defined information confidential. Also known as a confidentiality agreement, it is typically the first document exchanged in any business relationship where sensitive information needs to be shared.

Types of NDA

Not all NDAs are the same. The structure of the agreement should reflect the nature of the information being shared and the relationship between the parties.

Unilateral NDA (one-way NDA)

A unilateral or one-way NDA protects information flowing in one direction only. One party discloses confidential information and the other party is bound to keep it confidential. The disclosing party has no reciprocal obligation.

Unilateral NDAs are appropriate when:

•       An organisation is engaging a contractor, consultant, or agency who will access internal systems, data, or strategies

•       A business is pitching to a potential investor or partner and needs to share financial or commercial information

•       An employee is being onboarded and will have access to trade secrets, client lists, or proprietary processes

Mutual NDA (bilateral NDA)

A mutual or bilateral NDA binds both parties equally. Each party both discloses and receives confidential information, and both are obligated to protect what they receive.

Mutual NDAs are appropriate when:

•       Two businesses are exploring a joint venture, merger, or acquisition

•       Both parties will share sensitive commercial or technical information during negotiations

•       An integration or technology partnership requires each side to share proprietary data

Multilateral NDA

A multilateral NDA involves three or more parties, each of whom may both disclose and receive confidential information. It consolidates obligations into a single document rather than requiring separate bilateral agreements between each pair of parties.

Multilateral NDAs are appropriate when:

•       A consortium or multi-party project requires all participants to share information under a single confidentiality framework

•       A supplier, client, and third-party advisor are all engaged on the same project and need access to the same information

What is the difference between a unilateral and mutual NDA?

A unilateral NDA protects information flowing from one party to another. Only the recipient is bound by confidentiality obligations. A mutual NDA applies to both parties equally, with each obligated to protect what the other discloses. The right choice depends on whether information is flowing one way or both ways in the relationship.

What every NDA must include

Every enforceable NDA must contain certain core elements: a precise definition of confidential information, the names of all bound parties, the duration of obligations, permitted uses of the information, requirements for return or destruction at the end of the relationship, jurisdiction, and available remedies for breach. For a full clause-by-clause breakdown, see our NDA template guide.

Does an NDA need to be witnessed or notarised in Australia?

For most commercial NDAs between companies, witnessing and notarisation are not required. The agreement is enforceable once signed by authorised representatives of each party. Certain document types, such as deeds, have stricter execution requirements. If you are uncertain, seek legal advice before executing.

When to use an NDA

NDAs are appropriate any time sensitive information needs to be shared before a broader contract is in place. Common situations include:

• Engaging a new supplier, contractor, or agency

• M&A due diligence or investment discussions

• Onboarding employees or executives with access to trade secrets

• Sharing proprietary technology or product roadmaps with a development partner

• Entering licensing or distribution negotiations

Note that NDAs are not a substitute for a well-drafted main agreement, once the broader relationship is formalised, the main contract's confidentiality terms typically supersede the NDA.

When is an NDA not enough?

An NDA protects against unauthorised disclosure of information. It does not protect against misuse of information in ways not explicitly covered, nor does it prevent a party from developing competing products using knowledge gained through a relationship. For those risks, non-compete and non-solicitation clauses within a broader commercial agreement are more appropriate.

How in-house legal teams manage NDA volume

For enterprise legal teams, NDAs are among the highest-volume, lowest-complexity contracts they manage. A team of five lawyers should not be spending meaningful time on standard NDA requests. The operational challenge is not the NDA itself but the process surrounding it.

Common problems with manual NDA management include:

•       Sales or commercial teams requesting NDAs by email with no structured intake

•       Legal drafting each NDA from scratch rather than from an approved template

•       No version control or audit trail of what was agreed with each counterparty

•       Executed NDAs stored in personal email folders rather than a central repository

•       Renewal and expiry dates not tracked, leaving relationships without live confidentiality cover

Leading legal teams solve this by automating NDA workflows within their contract management platform. Business users submit a structured request, the platform generates a pre-approved NDA from a legal-controlled template, routes it for any required approval, and sends it for e-signature. The executed NDA is stored automatically with its expiry date tracked.

Sonnedix reduced their NDA process from multiple days to 12 minutes using Plexus. Their legal team no longer touches routine NDA requests. Legal sets the guardrails once and the business self-serves within them. Read the Sonnedix case study.

How long should an NDA last?

There is no standard duration. NDA length should reflect the sensitivity and commercial life of the information being protected. Trade secrets may warrant 10 or more years. Operational information shared during a project may be adequately protected for 12 to 24 months. Courts may decline to enforce unreasonably long confidentiality periods, so the duration should be proportionate to the genuine need.

Automate your NDA process

Plexus enables business teams to generate, send, and execute NDAs without involving Legal on every request. Legal sets the template and approval rules once. Everything else is automated. See how Plexus contract management works.