A non-disclosure agreement (NDA) is often part of a contract of employment or services. Its objective is to keep sensitive information about an organization, the products or services it offers and its customers confidential, particularly from competitors. Morgane Peng, Design Director at Societe Generale CIB, introduces the topic in this video:
NDAs come in two main forms:
Mutual NDAs bind both parties to maintain each other’s defined confidential details, while
Unilateral (one way) NDAs address confidentiality for only one of the parties.
The latter are used in contracts of employment or services. Mutual NDAs would be used in business-to-business relationships.
Confidential information is usually defined in the NDA itself, but it is likely to include financial, contractual or technical details that could damage the organization if divulged. This will include information that could benefit the organization’s competitors. Common examples are:
Trade secrets
Customer lists
Technical, engineering, scientific research and development
Manufacturing or research processes
Employee lists or salary details
Financial performance or projections
A non-disclosure agreement may form part of a contract of employment or services. It can sometimes appear as a confidentiality clause, or it might be a separate contract altogether. NDAs may be created as a part of contract termination, but the validity period for this kind of agreement can vary according to the jurisdiction. For example, in the UK, NDAs outside of an ongoing contractual relationship are deemed valid for between three and five years. So that would be the case when an NDA is created under UK laws.
When two parties to an NDA are in different countries, there are two separate legal considerations:
Jurisdiction: This is the country whose laws will be applied to the contract. If we used the example above regarding period of validity, a separate NDA that was to be enforced for 10 years may not be considered lawful under UK jurisdiction.
Governing country: This is where a legal challenge or enforcement of the NDA would be heard. From an employee’s or service provider’s point of view, this would ideally be their country of residence.
When negotiating an NDA, it is common for the jurisdiction to be the agreement originator’s country and the governing country to be the residence of the second party.
The behaviors outlined in NDAs must be reasonable and lawful. There are several common stumbling points when drafting them:
Broad language. If an NDA is too broad in duration or scope, it may be declared void in court.
Not confidential information. If an NDA covers information that has already been supplied or is public knowledge, a court may consider the agreement to be irrelevant.
Not lawful. Ethical, behavioral, safety or criminal issues that should be reported cannot be addressed in an NDA. For example, it would be unlawful for an NDA to cover sexual harassment or whistleblowing in most jurisdictions.
No consideration. For agreements to be lawful, there must be some benefit to both parties. This is quite clear if part of a contract of employment or services. But in other cases, if the agreement is entirely one-sided, it may not be binding.
As an employee or service provider, if an NDA or confidentiality clause was part of your original contract, you may find that you cannot detail certain aspects of your work when you update your CV or portfolio. See our article, How to Handle Non-Disclosure Agreements (NDAs) When You Write Your UX Case Study on this topic.
If you are being asked to sign an NDA or confidentiality agreement at the end of your contract, you are generally under no obligation to do so. You might wish to take legal advice.
Design projects can make clients vulnerable since they need to share potentially sensitive information as part of their brief. They are likely to want to protect this information with a non-disclosure agreement. Here are some typical scenarios:
A project that will be presented to potential partners, investors or distributors.
Any activities that require access to financial, marketing, technical or proprietary information.
A new product or service that is to be kept secret until a specific date.
How to Handle Non-Disclosure Agreements (NDAs) When You Write Your UX Case Study.
Keep it Confidential: How to Showcase Your NDA-Protected Design Work.
Some of the shortcomings in using NDAs are described in the Harvard Business Review: NDAs Are Out of Control. Here’s What Needs to Change.
Chetan Yadav describes some of his own experience as a UX designer working under an NDA in his informative article.
LegalZoom provides several free NDA templates for business, employees and contractors.
The abbreviation NDA has several uses, but in business, it usually stands for Non-Disclosure Agreement. This contract, typically between two parties, limits what defined, confidential information about one or both parties may be disclosed to others.
An NDA, or non-disclosure agreement, is a contract, typically between two parties, that limits the disclosure of defined, confidential information about one or both parties to others.
Breaking an NDA, or non-disclosure agreement, is not a crime. Still, the originator of the agreement may be able to ask a court to impose financial penalties and associated legal costs if you do.
The validity of non-disclosure agreements or NDAs may vary by jurisdiction. An NDA that is part of a contract of employment or supply of services (sometimes also called a confidentiality clause) is likely to last for the lifetime of that contract. However, separate NDAs or those extending beyond the contract's termination may be valid for one to five years, depending on the governing laws. For example, in the UK, such an NDA is likely valid for three to five years.
There are a variety of NDA templates available for free use, but be sure to choose one that’s valid for the laws of your country (the “jurisdiction”). These are the general steps:
Identify the confidential information
Describe how the confidential information must be treated
State any exclusions
Describe the obligations of the receiving part
State the duration of the agreement.
For multinational agreements, identify the jurisdiction (which countries’ law are to be used) and governing country (where a court case may be heard).
This is a complicated question and dependent on jurisdiction. For example, as of March 2024 in the UK, the law permits victims of crime from reporting them regardless of the presence of an NDA:
Changes to the law announced today (Thursday 28 March) will clarify that NDAs cannot be legally enforced if they prevent victims from reporting a crime and will ensure information related to criminal conduct can be discussed with the following groups without fear of legal action:
police or other bodies which investigate or prosecute crime
qualified and regulated lawyers. -other support services such as counsellors, advocacy services, or medical professionals, which operate under clear confidentiality principles.
In the US, the general answer is “yes,” but many sources point out that it is not a straightforward situation. Seek legal advice if in doubt.
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Here's the entire UX literature on Non-Disclosure Agreements (NDAs) by the Interaction Design Foundation, collated in one place:
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