What is an NDA and when do I need one?

An NDA is a non-disclosure agreement. That is a contract that says what information must be kept private, who can use it, how it can be used, and what happens if someone shares it without permission.

Business owners often use NDAs before sharing things like pricing models, customer lists, product plans, software ideas, recipes, manufacturing methods, marketing plans, or other information that gives the business an advantage.

An NDA can be useful when you need to share sensitive information for a real business reason. It is less useful if the information is already public, too vague to identify, or shared casually without clear limits.

FoundryCounsel is not a law firm and does not give legal advice. This is general educational information only. If you need a document reviewed or drafted for your situation, you can get a free match through our matching service or learn more about contracts and agreements.

An NDA often makes sense when you are sharing confidential information with someone outside your business and you want clear rules in writing.

Common examples:
- Hiring a freelancer, developer, designer, consultant, or marketing agency
- Talking with a manufacturer or supplier about a product idea or process
- Sharing financial or customer information during sale discussions or investment talks
- Exploring a partnership with a co-founder or another company
- Letting employees or contractors access internal methods, data, or plans

An NDA is only one piece of protection. You may also need a broader service contract, ownership terms for work product, or a founder agreement. Related help may be on contracts and agreements or partnership and founder agreements.

Say you run a small food business and want a packaging company to review your formula, sourcing method, and launch plan. Before sharing those details, you might ask the company to sign an NDA that:

1. Defines exactly what counts as confidential information
2. Says the information can only be used to evaluate the project
3. Limits who inside the company can see it
4. Requires return or deletion of materials when talks end

That said, an NDA does not guarantee a result or stop every misuse. If the wording is too broad, too narrow, or hard to enforce, it may not help much. A licensed attorney can explain what is realistic for your state and situation.

Keep it simple at first. Write down what information you plan to share, why you need to share it, and with whom. Then ask whether an NDA alone is enough or whether you also need a stronger contract.

When you ask for help, send only contact details and a short description of the issue. Do not send bank account numbers, tax ID numbers, immigration information, or confidential business secrets through a form.

If you want help from a licensed business-law attorney, you can use FoundryCounsel's free matching service. You can also browse services, read more guides, or see how matching works.