Mutual Non-Disclosure Agreement (Bilateral NDA)

Mutual Non-Disclosure Agreement (Bilateral NDA): a practical guide

A Mutual Non-Disclosure Agreement, also called a bilateral NDA, records how two sides will handle information they share with each other in confidence. It sets expectations for the information covered, its permitted use, and who may see it.

What it's for

People use this document when both sides expect to share non-public information while discussing or carrying out a project, service, business relationship, or other plan. Each side may disclose information and receive information, even if one side shares more than the other.

The NDA helps the sides agree on practical boundaries before sharing details such as plans, methods, designs, customer information, or financial information. It does not by itself decide the price, work, delivery dates, ownership of work, or other main terms of a project.

If only one side expects to share protected information, a Unilateral Non-Disclosure Agreement may fit better. If the sides are also agreeing on services or project work, they may need a separate agreement that covers those terms.

Who uses it

• Two businesses exploring a possible partnership or transaction.
• A client and a freelancer who both need to share non-public project information.
• Two consultants or service providers planning work together.
• A product creator and a potential manufacturer or distributor discussing a project.
• Two organizations evaluating a joint project or exchange of expertise.

Terms to decide on

Purpose of disclosure

Describe the discussions or work for which the information may be used. Keep the description specific enough to guide both sides, such as evaluating a proposed project or carrying out an identified service.

Information covered

State what kinds of non-public information the sides intend to protect, and whether spoken, written, visual, electronic, or sample materials are included. Consider how the sides will identify confidential material when it is shared.

Information not covered

Decide how to treat information already known to the recipient, made public without a breach, received properly from another source, or developed independently. Describe these exceptions clearly and consider what records could show that an exception applies.

Permitted use and safeguards

Say that covered information may be used only for the stated purpose, and describe reasonable steps each side should take to prevent unauthorized access or sharing. Avoid promising a level of protection that a side cannot maintain in practice.

Permitted representatives

Identify which employees, advisers, contractors, or other representatives may need access for the stated purpose. Decide what conditions apply before sharing information with them, including whether they must keep it confidential.

Sharing required by outside rules

Decide how a side should handle a request or requirement to disclose covered information. The wording can address notice to the other side when allowed and sharing only what is required; check local rules for any required process.

Return or deletion

State what should happen to information and copies when discussions end or a side asks for them back. Consider whether routine backups or records that must be kept need a clear exception and continued protection.

Survival term

Specify how long the confidentiality duties continue, including after discussions or work end. Use a clear duration or a clearly described event, and make sure both sides understand when the period starts.

Common mistakes

• Using a purpose so broad that it does not explain what the information may be used for. A narrow, plain description makes the agreed boundary easier to understand.
• Assuming that calling something confidential will protect every item automatically. The sides should describe covered information and how it will be identified, especially for spoken disclosures or physical samples.
• Leaving out ordinary exceptions, such as information already known to the recipient or later made public through no fault of that recipient. Without clear exceptions, the sides may have different expectations about what is covered.
• Naming representatives without deciding what they may do with the information or what confidentiality steps apply to them. Share only with people who need access for the stated purpose.
• Choosing a survival term without checking when it begins or how it fits the information being shared. Write the start point and duration in words both sides can apply.
• Using this NDA to try to settle project details such as fees, deadlines, ownership, or acceptance of work. Those terms need to be addressed separately.

Before you sign

• Confirm that both sides may share the information described and that each signing person can act for the named side.
• Read the purpose and check that it matches the actual discussions or work.
• Review the information covered, the exclusions, and how spoken or sample information will be handled.
• Check that the permitted representatives and safeguards are workable for both sides.
• Make sure the return or deletion process and any exceptions are clear.
• Confirm when confidentiality duties start and how long they continue.
• Read any additional terms carefully and remove wording that is unclear or conflicts with the rest of the document.
• Check local rules on signing, witnesses, notarization, registration, notice, or required wording, or ask a qualified lawyer if much is at stake.