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Types Of NDA For A Startup/Business In India

No business owner wants their customer lists or trade secrets to be known by rivals, and no employer wants an employee to divulge any private information to a third party. One needs to protect their information with an NDA in order to stop such leaks of sensitive information. If a party has not signed an NDA, a court will not be able to grant relief for the revelation of sensitive information.

Below are some of the types of NDAs that exist:

1. One-Sided NDAs (sometimes referred as Unilateral NDAs)

NDAs under which only one party discloses its confidential information to the other party.A unilateral NDA is the most common type of agreement. This agreement is between one party, who is the disclosing party, and another party, who is the receiving party. The disclosing party agrees to provide confidential information to the receiving party, who agrees not to disclose the information to any third party. The main benefit of this agreement is that it is relatively simple to draft and execute. However, the main drawback is that the receiving party is not legally bound to keep the information confidential.

2. Mutual NDAs (sometimes referred as Bilateral or Multilateral NDAs)

NDAs under which both or all parties receive protection against misuse of their confidential information disclosed to the other party. Each party to this NDA is under confidentiality obligations vis-à-vis the other party’s confidential information received by them.A bilateral NDA is between two parties, the disclosing party and the receiving party. This agreement is more complex than a unilateral NDA, but it provides more protection for the disclosing party. The disclosing party agrees to provide confidential information to the receiving party, who agrees to keep the information confidential and not to disclose it to any third party. The main benefit of this agreement is that it provides more protection for the disclosing party. However, the main drawback is that it is more complex to draft and execute.

A multilateral NDA is between three or more parties. This agreement is the most complex of the three types of NDAs. The disclosing party agrees to provide confidential information to the receiving parties, who agree to keep the information confidential and not to disclose it to any third party. The main benefit of this agreement is that it provides the most protection for the disclosing party. However, the main drawback is that it is the most complex to draft and execute.

3. Merger and Acquisition (M&A) NDAs

In order to prevent one or both parties from releasing any information deemed confidential, companies thinking about private or public M&A typically start the process by negotiating and signing an NDA.

4. Employer-Employee NDAs

Once an employee is employed, employers frequently ask for or demand that they sign an NDA. Employee usage and disclosure of proprietary information controlled by the corporation are constrained by this kind of NDA. Additionally, some businesses occasionally sign supplemental NDAs with employees to strengthen the secrecy restrictions outlined in their employment agreement. These agreements are based on the commercial prospects that their firm is engaging in at the moment.

Conclusion

Now you will be in a better position to choose the type of NDA you require now that you are more familiar with the many types of NDA.  Before disclosing confidential information, the disclosing party (the party providing its confidential information) should confirm that the other party and the disclosing party have an existing nondisclosure agreement (NDA). If there is an existing NDA, the disclosing party should make sure that it covers the exchange of the pertinent confidential information that is now shared. If not, the parties must either create a new agreement or make the one they already have appropriate changes.



Written by

Sagar Singh

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