NDA (non-disclosure agreement): meaning and key clauses

Key clauses in an NDA

A useful NDA is specific about what is protected and what is not, because vague definitions are hard to enforce. The clauses that matter most when you review or draft one are these.

• Definition of confidential information, with examples
• Permitted purpose and permitted recipients
• Exclusions, such as public information and information already known
• Obligations to protect and return or destroy information
• Term of the obligations, often two to five years after disclosure
• Remedies, including injunctive relief
• Governing law and dispute resolution

Limits on what an NDA can do

Under section 27 of the Contract Act, agreements in restraint of trade are void, so non-compete restrictions after a relationship ends are generally unenforceable, though confidentiality obligations and reasonable non-solicitation clauses are more likely to be upheld. An NDA cannot prevent disclosures required by law or a regulator. Where personal data is shared, the Digital Personal Data Protection Act, 2023 and its rules also apply.

Why it matters for startups

Use NDAs with employees, contractors and potential partners before sharing source code, product plans or customer data. Many investors do not sign NDAs at the pitch stage, so share only what you are comfortable with until diligence. Keep records of what was disclosed and when, because proving breach depends on evidence. Mark sensitive documents as confidential and limit access to people who need them.