What is a mutual non-disclosure agreement?

A mutual Non-Disclosure Agreement is a legally binding document that requires both parties involved to not disclose any shared information protected by the agreement. This legal document is frequently used to keep information hidden and confidential, such as trade secrets or private information. It primarily builds a confidential relationship between the two parties and is connected to the information they exchange in the agreement. This requires the signatures of both the parties involved. The contract will also define the manner in which this information can be provided and prevent the disclosure of any information without both parties’ permission. Furthermore, such a contract will include a provision to address the consequences if either side leaks the information. It is generally used to prevent misrepresentation, theft, or abuse of specific confidential information. Example of mutual non-disclosure agreements are provided above for your reference.

This is also known as secrecy agreement, proprietary information agreement, confidentiality agreement.

Whenever there is a signing of Mutual Non- Disclosure Agreement, it usually includes other related documents, to further secure the confidential information, such as the Non-Compete Agreement and the Non-Circumvention Agreement. Let us explore these two.

Non-Compete Agreement  A non-concurrent agreement is a legal contract or a condition in a contract that requires an employee not to compete with an employer after the term has ended. These agreements also prevent the employee from providing any other party with any proprietary information or secrets during or after work. Many contracts stipulate a period when the employee is not allowed to work for a rival after he has ended his job. Employers may force staff to sign contracts not competing to maintain their market place. Employees, contractors and consultants may be asked to sign these agreements.

Non-Circumvention Agreement – The primary aim of a non-certainty agreement is to safeguard companies from being exploited. It prohibits one or more parties to a commercial transaction from being circumvented and from being robbed of full compensation for their work or participation. Furthermore, the agreement assures that the intellectual property a company reveals to another party during talks is not divulged to a third party. An uncertain party may apply a non-circumvention agreement to protect himself when he first concludes a deal with a specific party or there is insufficient confidence between the parties.

Other Types of Non-Disclosure Agreements

Aside from a Mutual Non-Disclosure Agreement, many varieties of Non-Disclosure Agreements exist and are usually categorized on the basis of the parties involved and the nature of the agreement. We will attempt to examine the other types of agreements below. 

Unilateral Non-disclosure Agreement: The unilateral non-divulgation agreement is utilized only if one party exposes private information in situations like a corporation disclosing a publicity agency marketing secrets or a technology company disclosing a new product to a software developer. This is supposed to be a one-way agreement, hence the word “unilateral.”Precedent Confidentiality Agreement: You may have to sign a precedent confidentiality agreement on confidentiality before you provide the books of your account for scrutiny if you wish to conclude a merger or acquisition agreement with other firms. This helps to keep your financial information secret even when your company purchaser cancels the purchase agreement. NDAs For Employees: Even after they leave your company, employees will have a role in keeping information about the company private. You can be sure of this only when you have them sign an employees’ non-disclosure agreement. This agreement legally oblige workers not to divulge any information about your company even if they are your employees. In this approach, even those employees who may feel disappointed and unrecognized in leaving your firm are obligated to keep the company’s information secret.

How to Make a  Mutual Non-Disclosure Agreement

Provided in this article are PDFs you can download above. However if none of those satisfy your ideal Mutual Non-Disclosure Agreement, here are the steps you can follow to make one.

Step 1: Title

At the top part of the document, preferably at the center, there should be the names of the document which is the Mutual Non-Disclosure Agreement. The font must be bigger than the rest to emphasize the title.

Step 2: Introductory Paragraph

Introduce the agreement in a short paragraph to let the reader know what the next paragraphs will be all about. This may include the effective date and the entire duration of the agreement. This may also include the names of the companies involved, you just have to decide what your mutual non disclosure agreement format will be.

Step 3: Introduce the affiliates or the parties involved

Let the parties involved or the affiliates be known. “Affiliate” means any entity which controls, is controlled by, or is under common control with a Party during the term of this Agreement; “control” being the direct or indirect ownership of more than 50% of the stock, shares or interests entitled to vote for election of directors or other governing body of the entity or otherwise having the ability to direct the management of such entity. 

Step 5: Inclusion of the clauses

Specific terms or clauses are included in a written contract. Clauses describe each party’s rights and duties under the Agreement. Here are the mutual non disclosure agreement example clauses:

There are several other clauses you can add depending on how you want to secure you mutual non-disclosure agreement. You can check out the clauses on the mutual non-disclosure agreement templates provided above.

Step 6: Have it signed by both parties

Of course, like every other legal documents or contracts, signatures should be provided by the parties involved to ensure that they have read, understood, and agreed to everything that has been written inside the contract that they agree to the terms and to uphold your end of the bargain.


Mutual vs Unilateral Non-Disclosure Agreement

A unilateral non-disclosure agreement is also known as a one-way non-disclosure agreement. It is the most frequent kind of non disclosure agreement used by corporations and is usually included in an employment contract. The unilateral non disclosure agreement is designed to safeguard corporate information and to avoid disclosure by the receiver of the firm’s important information. The firm makes no commitments for non-disclosure in those agreements mostly because the recipient does not have critical information. On the other hand, a mutually binding non disclosure agreement may alternatively be termed a two way non disclosure agreement or bilateral non disclosure agreement. In a bilateral non disclosure agreement, both parties agree not to divulge proprietary or private information regarding the interests of the other party. The sensitive material protected by the non disclosure agreement is also defined in the contract, just as a unilateral non disclosure agreement would.

Non Disclosure agreement vs Mutual Non-Disclosure Agreement

There are several types of non-disclosure agreements and they are categorized according to the basis of the parties involved and the nature of the agreement. One type of a non-disclosure agreement is a mutual non-disclosure agreement which refers to an agreement that is two-way or used when both the parties are required to not disclose important information to competitors. Other types of non-disclosure agreements are: Unilateral Non-disclosure Agreement, Precedent Confidentiality Agreement and Non-Disclosure Agreements for Employees.

When should we sign a mutual non-disclosure agreement?

When parties are keen to get into a commercial partnership, a non-disclosure agreement is most often signed after they identify business secrets or information that is private. Non-disclosure agreements are often designed to safeguard the secrecy of technical or business information that one or both parties deem important.

These documents are used by companies and start-ups to guarantee that their brilliant ideas are not stolen by negotiating persons. Anyone who breaks a non-disclosure agreement shall be sued and punished in terms of the value of losses of profit. There may even be criminal charges. Non-disclosure agreements can be unilateral when just the information receiver must remain silent or mutual where both parties accept not to discuss sensitive material amongst themselves. non disclosure agreements may be unilateral.