How to Create an NDA That Actually Protects Your Business

(And Avoid the Common Mistakes That Make Them Useless)

Whether you're hiring a freelancer, pitching to investors, or onboarding a new partner, you’re probably sharing sensitive information. If you don’t have a strong Non-Disclosure Agreement (NDA) in place, your ideas, strategies, or client data could walk out the door—with zero legal consequences.

At LawCierge.ai, we help small businesses create NDAs that actually hold up—so you don’t get burned. Here’s your step-by-step guide to writing an NDA that protects your business, without sounding like legal gibberish. 🛡️ What Is an NDA?

A Non-Disclosure Agreement (NDA) is a legally binding contract that prohibits one party from sharing or using confidential information they received from another party. It creates a clear expectation: "You can see this, but you can't repeat it, reuse it, or reveal it."

NDAs are used in:

• Client onboarding

• Employee and contractor hiring

• Mergers, acquisitions, and investor meetings

• Product development and R&D

• Vendor relationships
  

⚠️ Why Most NDAs Fail

Many DIY or templated NDAs are too vague, too broad, or missing key enforceability terms. That means:

• They may not be enforceable in court

• They might not clearly define what’s “confidential”

• They don’t include time limits, remedies, or jurisdiction
  

An NDA is only as strong as the language inside it.

✅ What a Strong NDA Must Include

Here’s everything a legally enforceable NDA should contain—and why each piece matters.

1. Introduction of the Parties Involved

Clearly identify:

• The Disclosing Party (who owns the information)

• The Receiving Party (who's being given access)
  

📌 Example:This Non-Disclosure Agreement ("Agreement") is made between Smith & Co. Marketing ("Disclosing Party") and Jessica Lee, Independent Contractor ("Receiving Party").

2. Definition of Confidential Information

This is one of the most critical parts of the NDA. Be specific.

✅ Do include:

• Client lists

• Business strategies

• Financial data

• Source code

• Product roadmaps

• Customer data

• Marketing plans
  

🚫 Don’t just say “all information shared” — that’s too vague and could get thrown out.

📌 Example:“Confidential Information includes, but is not limited to, business plans, pricing strategies, internal communications, customer lists, and proprietary marketing materials.”

3. Obligations of the Receiving Party

Spell out what the receiving party can and cannot do.

They should:

• Use the information only for a specific purpose

• Not disclose it to third parties

• Take reasonable steps to protect it
  

📌 Example:The Receiving Party agrees not to disclose, publish, or disseminate any Confidential Information and shall restrict disclosure to employees or agents with a need to know, who are bound by similar confidentiality obligations.

4. Exclusions From Confidential Information

Not everything is confidential—even if you want it to be. Courts usually won’t enforce NDAs on information that:

• Is already publicly known

• Becomes public through no fault of the receiving party

• Was already known by the receiving party before disclosure

• Is independently developed
  

📌 Example:Confidential Information does not include information that is or becomes publicly available without breach of this Agreement.

5. Term (How Long the NDA Lasts)

You must include:

• How long the confidentiality obligation lasts (typically 1–5 years)

• Whether it extends beyond the business relationship
  

📌 Example:This Agreement shall remain in effect for two (2) years from the date of signing, and obligations of confidentiality shall survive termination for an additional two (2) years.

6. Remedies for Breach

Spell out what happens if someone breaks the NDA. You can include:

• Right to seek injunctive relief (to stop them from disclosing)

• Right to pursue monetary damages

• Attorneys’ fees and legal costs if you sue
  

📌 Example:The Disclosing Party shall be entitled to injunctive relief and any other available legal remedies in the event of a breach or threatened breach of this Agreement.

7. Jurisdiction and Governing Law

This determines which state’s laws will apply if there’s a dispute.

📌 Example:This Agreement shall be governed by and construed in accordance with the laws of the State of Massachusetts, without regard to its conflict of law provisions.

8. Signatures

A contract isn’t enforceable without valid signatures from all parties. Include:

• Full name

• Title (if representing a company)

• Signature

• Date
  

📌 Bonus Tip: Electronic signatures (like DocuSign or Adobe Sign) are legally valid in the U.S. under the E-SIGN Act.

📝 Optional Clauses (But Highly Recommended)

🔁 Return or Destruction of Materials

What should the receiving party do with confidential documents when the relationship ends?

📌 Example:Upon termination, the Receiving Party shall return or destroy all documents containing Confidential Information.

🤝 Mutual NDAs

If both parties are sharing sensitive info (e.g., during a partnership discussion), make the NDA mutual.

📌 Use case: Investor discussions, joint ventures, mergers.

🛠️ Common NDA Mistakes to Avoid

🚫 Using generic templates without tailoring 🚫 Forgetting to define what counts as “confidential” 🚫 Omitting duration or post-termination terms 🚫 Not specifying jurisdiction 🚫 Not having it signed and dated

👩‍⚖️ How LawCierge.ai Makes NDAs Easy

Writing a strong NDA doesn’t require a law degree—but it does require attention to detail. LawCierge.ai helps you:

✅ Instantly generate customized NDAs based on your industry and use case ✅ Review existing NDAs for missing terms or risks ✅ Access real attorneys for legal audits and contract feedback ✅ Use our 24/7 LegalChat AI to answer questions as you go

Protect your business ideas, clients, and competitive edge—before it’s too late. [Generate Your NDA with LawCierge AI→]