What is a Unilateral NDA? 

A Unilateral Non-Disclosure Agreement (NDA) is a legal contract in which one party agrees to keep certain information confidential while the other party discloses it. Also known as a One-Way NDA, this agreement is commonly used when a business, employer, or individual shares sensitive information such as trade secrets, financial data, or business strategies—with another party. Under this agreement, the receiving party is legally bound not to disclose or misuse the confidential information.

For example, if a company is hiring a freelancer for a project and needs to share confidential details, A Unilateral NDA ensures the freelancer cannot disclose or use the information for any purpose other than the project. 

Benefits of a Unilateral NDA

• Protects sensitive business information from unauthorized disclosure.
• Establishes clear legal obligations for confidentiality.
• Enhances trust in business relationships.
• Prevents financial losses due to information leaks.
• Safeguards competitive advantage by securing trade secrets.
• Suitable for freelancers, vendors, and business partnerships.

Types of Parties Involved in a Unilateral NDA

1. Disclosing Party 

The party that shares confidential information and wants to protect it. This is usually a business, employer, inventor, or individual with proprietary data. 

2. Receiving Party 

The party that gains access to confidential information but is legally bound to keep it secret. This could be an employee, contractor, investor, or business partner. 

Who Needs a Unilateral NDA/One-Way NDA?

1. Employers and Employees

Employers often require employees, especially those in managerial, technical, or strategic roles, to sign a Unilateral NDA. This prevents them from sharing confidential business information such as trade secrets, financial data, or client details, both during and after their employment.

2. Investor and Startup

When startups seek funding, they often disclose business plans, revenue models, or proprietary technology to potential investors. A Unilateral NDA ensures that investors do not share or use this confidential information without permission, protecting the startup’s competitive edge.

3. Company and Consultant

Businesses frequently hire consultants for legal, financial, marketing, or technical expertise. Since consultants gain access to sensitive company information, a Unilateral NDA ensures that they do not disclose or misuse it for personal or competitive advantage.

Key Clauses Unilateral NDA Should Have

1. Confidential Information 

This clause clearly defines what information is considered confidential. It may include business strategies, financial data, client lists, intellectual property, or any proprietary information shared by the disclosing party. 

2. Obligations of the Receiving Party 

The receiving party is legally bound to keep the disclosed information confidential. They must not share, use, or distribute it for any purpose other than what is specified in the agreement. 

3. Exclusions from Confidentiality 

Not all information falls under confidentiality protection. This clause outlines exceptions, such as publicly available data, information independently developed by the receiving party, or details already known before signing the One-Way NDA. 

4. Duration of Confidentiality 

This specifies how long the receiving party must maintain confidentiality. Depending on the agreement, this period may last for a few years or indefinitely to ensure long-term protection. 

5. Permitted Disclosures 

In certain cases, the receiving party may need to share confidential information with employees, legal advisors, or third parties. This clause defines the conditions under which such disclosures are allowed, ensuring they are still bound by confidentiality. 

6. Governing Law 

This clause states which laws will apply to the agreement, ensuring that any legal matters related to the NDA are handled under a specific legal framework. 

7. Jurisdiction Law 

If a dispute arises, this clause determines the jurisdiction where legal proceedings will take place, helping both parties understand their legal rights and obligations.

Know the Law

In India, the validity of NDAs is governed by the Indian Contract Act, 1872 (Sections 10, 14, 23, and 27). NDAs must be lawful and voluntary. Reasonable restrictions on trade to protect confidentiality are allowed under Section 27.

Why choose DigiLawyer for Drafting Unilateral NDA?

DigiLawyer draft legally verified Unilateral Agreements to protect sensitive business information during collaborations, partnerships, or negotiations. Our templates cover key aspects like confidentiality, duration, and breach consequences, ensuring both parties are equally bound. 

We ensure compliance with the Indian Contract Act, 1872 and the Arbitration and Conciliation Act, 1996, offering a solid legal foundation. Whether you need a standard template or customized clauses for non-compete or non-solicitation, we’ve got you covered.

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