Non-Disclosure Agreements (NDAs): How They Work and When to Use One

Reviewed 30 October 2026 · England and Wales · General information, not legal advice

An NDA is a contract to keep information confidential and use it only for an agreed purpose, enforced by damages and injunctions. It cannot stop whistleblowing, reporting a crime or a victim of crime speaking to the police or a lawyer.

A non-disclosure agreement, or NDA, is a contract in which one or both parties promise to keep specified information confidential and to use it only for an agreed purpose. It is enforceable in England and Wales like any other contract, through damages and, more usefully, an injunction to stop a threatened leak. What an NDA cannot do is silence someone about a crime or a protected whistleblowing disclosure or, for agreements signed since 1 October 2025, stop a victim of crime talking to the police, a regulator, a lawyer or a support service; and from 2027 clauses that stop workers speaking about harassment or discrimination are due to become void. This guide covers the two kinds of NDA, what a good one contains, enforcement and its limits, the disclosures the law protects, how NDAs are used in deals, employment and settlement agreements, solicitors' fees and the red flags to watch for.

One-way and mutual NDAs

A one-way (or unilateral) NDA protects a single discloser: a business showing a prototype to a manufacturer, a founder pitching to a potential partner, or an employer handing a new recruit access to customer data. A mutual NDA binds both sides, and is the norm where two businesses exchange information to explore a joint venture, a merger or a supply relationship, because each will learn things about the other.

Both are ordinary contracts, so they need offer and acceptance, an intention to create legal relations and consideration from each side; a one-way NDA is often signed as a deed to remove any doubt about consideration. Confidentiality agreement, confidentiality undertaking and secrecy agreement are different names for the same thing.

What a good NDA covers

Confidential information and the exclusions

The heart of the document is the definition of what is protected. It should be wide enough to cover the information actually being shared, whether written, oral or electronic, and ideally identify it by category: technical data, source code, customer lists, pricing, business plans, the fact that negotiations are taking place at all. A definition that covers everything the parties ever say to each other is hard to enforce because a court must be able to tell what was secret.

Four exclusions appear in almost every NDA and should be in yours. Information is not confidential if it is or becomes public other than through the recipient's breach; if the recipient already had it before disclosure and can show that; if the recipient developed it independently without using the disclosed material; or if a third party gave it to the recipient without any duty of confidence. A fifth clause permits disclosure where the law, a court or a regulator requires it, usually with a duty to tell the discloser first where that is lawful.

Permitted use, recipients and return of material

The agreement should say what the recipient may do with the information, normally only evaluate the proposed transaction, and who inside the recipient's organisation may see it: directors, employees and professional advisers who need to know and who are bound by equivalent duties. At the end of the purpose the recipient should return or destroy the material and confirm in writing that it has, with the usual carve-out for copies kept in routine computer back-ups or where regulation requires retention.

Duration

Business NDAs commonly run for two to five years from the date of disclosure, long enough for commercial information to go stale. Genuine trade secrets, such as a manufacturing process or a recipe, should be protected for as long as they stay secret, so that obligation should be indefinite. An NDA that keeps everything confidential forever looks oppressive and is more likely to be read narrowly by a court. The agreement should also state the governing law and the courts that will decide disputes; for a cross-border deal this matters more than any other clause.

What happens if an NDA is broken

The discloser can sue for damages for breach of contract, measured by the loss the leak caused or, in some cases, the fee a reasonable licensee would have paid for the information, and the limitation period is six years (twelve if the NDA is a deed). Where a breach is threatened or continuing, an interim injunction from the High Court can stop publication or use before the damage is done, and a final injunction can stop the recipient exploiting any head start. Independently of the contract, the law of confidence and the Trade Secrets (Enforcement, etc.) Regulations 2018 protect information that has the necessary quality of confidence, so a weak NDA does not leave the discloser with nothing.

In practice enforcement has limits. You must prove that the information was confidential, that this recipient used or disclosed it and that you suffered loss. Injunction proceedings are expensive, must be started fast and bring publicity that may be worse than the leak. Where the recipient is abroad, enforcing an English judgment adds cost and delay.

What an NDA cannot do

Several rules make a confidentiality clause void or unenforceable however it is drafted.

• Whistleblowing: section 43J of the Employment Rights Act 1996, inserted by the Public Interest Disclosure Act 1998, makes void any term that purports to stop a worker making a protected disclosure, for example to a regulator or an MP, about wrongdoing in the public interest.
• Crime: no contract can lawfully prevent someone reporting a crime to the police or giving evidence when a court or tribunal requires it, and an NDA used to conceal criminal conduct is unenforceable as contrary to public policy.
• Victims of crime: section 17 of the Victims and Prisoners Act 2024, in force since 1 October 2025, makes a provision in an agreement signed on or after that date void to the extent that it prevents a victim of criminal conduct disclosing it to the police or another investigating body, a qualified lawyer, a regulator, a victim support service and certain others specified in regulations. The Victims and Courts Act 2026, which received Royal Assent on 29 April 2026, will replace this with broader protection allowing disclosure to anyone for any purpose, but those provisions have not yet been brought into force.
• Harassment and discrimination at work: the Employment Rights Act 2025 adds a new section 202A to the Employment Rights Act 1996 under which any term that prevents a worker speaking about harassment or discrimination, or the employer's response to it, will be void, subject to exceptions for agreements the worker asks for with independent advice. The government consulted on the detail between April and July 2026 and the provision is expected to start in September 2027; until then it is not in force. The guides to the Employment Rights Act timetable and discrimination at work cover the background.
• Professional rules: the Solicitors Regulation Authority's warning notice on NDAs, updated on 6 August 2024, tells solicitors that an NDA must not stop reporting to regulators or the police, protected disclosures, cooperation with investigations or disclosures to professional advisers, must be clear about what is permitted, and must not be used oppressively. A solicitor who drafts an improper NDA faces disciplinary action, so a reputable firm will insist on the carve-outs.

An NDA can never stop you taking legal advice about the agreement itself; a clause that tries to is a warning sign.

NDAs in business deals, employment and settlement agreements

In commercial life an NDA is the first document signed when a sale of a business, an investment or a joint venture is explored, before due diligence begins. Investors frequently refuse to sign NDAs at the pitching stage because they see too many similar ideas, so founders should protect what they can by other means, such as registering a trade mark or relying on copyright, and disclose detail only once interest is serious. The guides to registering a trade mark and copyright law explain those protections, and the broader introduction to intellectual property law shows how they fit together. Where founders are going into business together, confidentiality usually sits inside a shareholders' agreement rather than a separate NDA.

In employment, confidentiality is normally a clause in the contract rather than a separate agreement, backed by the implied duty of fidelity while employment lasts. After employment ends only genuine trade secrets remain protected by implied duties, which is why contracts spell out what the employee must keep confidential afterwards. These clauses are different from restrictive covenants, which limit who a former employee can work for or approach; both are read strictly against the employer.

Settlement agreements, under which an employee waives claims in return for a payment, almost always contain a confidentiality clause covering the terms and often the circumstances of the departure. The clause must carve out protected disclosures, reporting crime, disclosures to the authorities, to a lawyer, to a medical professional and to immediate family, and from September 2027, on the current timetable, it will not be able to cover harassment or discrimination unless the worker asks for confidentiality and takes independent advice. Because the employee must take advice from an independent adviser for the agreement to be binding, that adviser will check the clause; see the guide to settlement agreements.

What a solicitor charges and when to use one

Reviewing a standard one-way NDA is a small job that most firms offer for a fixed fee; drafting a bespoke mutual NDA for a transaction costs more because the definitions and permitted disclosures must be tailored. Firms that charge by the hour work from rates that the courts' guideline figures for costs purposes put at roughly £142 for a trainee outside London to £579 for a senior London solicitor; ask for a fixed quote and confirm whether VAT is included. An intellectual property solicitor is the right specialist where the information is technical or forms part of a licensing deal; a corporate or commercial solicitor handles NDAs in sales and investments; and an employment solicitor should see any confidentiality clause in a settlement agreement, where the employer usually contributes to the cost of the advice.

A reputable template is adequate for a simple one-way disclosure between small businesses. Instruct a solicitor when the information is genuinely valuable, when the other side drafted the document, when a party is outside England and Wales, when the NDA sits alongside an investment or sale, or whenever it relates to a dispute at work. Compare intellectual property solicitors in London, business law solicitors in Manchester or the solicitors in Nottingham to find a firm.

Red flags before you sign

• A definition of confidential information that covers everything, with none of the four standard exclusions.
• No carve-out for disclosures required by law, to regulators, to the police or to your own legal advisers.
• A one-way agreement when you will be sharing information too.
• An indefinite term for ordinary commercial information rather than genuine trade secrets.
• A fixed sum payable on any breach, which may be an unenforceable penalty but will be used to pressure you.
• Restrictions on who you can work for or deal with, which are restrictive covenants dressed as confidentiality and need separate advice.
• Foreign governing law or courts without any explanation.
• In a settlement agreement, wording that stops you talking to a doctor, a therapist or your family about what happened.

Ask for any of these to be changed before you sign, and get advice if the other side refuses.

Frequently asked questions

Is an NDA legally binding in the UK?

Yes, provided it meets the ordinary requirements of a contract: an agreement, an intention to create legal relations and consideration from each side, or execution as a deed. Once signed it can be enforced through damages and injunctions. It is void, however, to the extent that it tries to prevent protected whistleblowing, the reporting of a crime, or a victim of crime speaking to the police, a lawyer, a regulator or a support service, and solicitors are not allowed to draft terms that attempt this.

Can an NDA stop me going to the police or an employment tribunal?

No. Reporting a crime to the police can never be contracted away, and since 1 October 2025 section 17 of the Victims and Prisoners Act 2024 makes any clause void that stops a victim of crime speaking to the police, a lawyer, a regulator or a support service. A confidentiality clause in a settlement agreement cannot prevent you giving evidence when a tribunal requires it. What a valid settlement agreement does is waive the specific claims you agreed to settle, after independent advice.

How long does an NDA last?

As long as it says. Commercial NDAs usually impose obligations for two to five years after disclosure, by which time the information has lost its value, while genuine trade secrets are often protected for as long as they remain secret. If the agreement is silent, a court will imply a reasonable period in the circumstances, which creates uncertainty for both sides. Check the duration clause and whether it runs from signature or from each disclosure.

What happens if I break an NDA?

The other party can sue for breach of contract and claim damages for the loss your disclosure caused, or in some cases the value of the information. If the breach is continuing or threatened they can apply for an injunction, including an urgent interim injunction, to stop further use or publication, and you may be ordered to pay their legal costs. Breaching an NDA is not a criminal offence in itself, although the disclosure might separately breach data protection or trade secrets law.

Do I need a solicitor to draft an NDA?

Not always. For a simple one-way disclosure between small businesses a reputable template, adjusted to describe the information and the purpose accurately, is often enough. Use a solicitor when the information is valuable, when the agreement is mutual and tied to a sale or investment, when the other side has drafted it, when a party is outside England and Wales, or when the clause sits in an employment or settlement agreement, where the legal limits described above apply.

Are confidentiality clauses in settlement agreements still allowed?

Yes, for now. A settlement agreement can keep its terms and the circumstances of your departure confidential, provided it carves out protected disclosures, reporting crime, and disclosures to the police, regulators, lawyers, medical professionals and close family. From September 2027, on the government's current timetable, the Employment Rights Act 2025 will make void any clause that stops a worker speaking about harassment or discrimination, with limited exceptions where the worker requests confidentiality and has independent advice.

Related guides

• Settlement Agreements: What They Are and Why You Need a Solicitor
• How to Register a Trade Mark in the UK: Process, Costs and Common Mistakes
• UK Copyright Law Explained: What Is Protected and for How Long
• Employment Law Changes in 2026: What the Employment Rights Act Means for You
• Shareholders' Agreements: What They Cover and Why Your Company Needs One
• What Is Intellectual Property Law?

This guide describes the law in England and Wales as at 30 October 2026. It is general information, not legal advice about your situation; the law and the figures it quotes change, so check the position with a solicitor before acting. LawFirms.co.uk is a directory and does not provide legal services.