4 Things You Should Know About Non-Disclosure Agreements (NDA’s)

4 min readMar 4, 2024

Are you navigating the intricate world of business deals, partnerships, or intellectual property exchanges? If so, you’ve likely encountered the term “Non-Disclosure Agreement” or NDA.

This seemingly straightforward contract plays a crucial role in safeguarding sensitive information.

But what exactly are NDAs, and why are they so crucial..?

Here are four key things you need to understand about NDAs:

1. What is a Non-Disclosure Agreement?

A non-disclosure agreement, or NDA, is a legally binding contract that establishes confidentiality between parties. It acknowledges that confidential information will be shared between the parties and its purpose is to prevent unauthorised dissemination of such confidential information to outsiders.

In today’s hyper-connected and competitive business environment, maintaining confidentiality is paramount for organisations seeking to protect their intellectual property and maintain a competitive edge.

Beyond outlining confidentiality obligations, NDAs articulate clear guidelines for handling sensitive information including how it should be stored, accessed, and disclosed. This clarity allows no room for misunderstandings or disputes regarding the handling of sensitive information.

NDAs can vary widely in scope and complexity depending on the nature of the confidential information being protected and the parties involved. Some NDAs may pertain to specific projects or transactions, while others may encompass broader confidentiality obligations extending beyond the duration of a particular engagement.

2. When are NDAs Needed?

NDAs serve as a trust-building mechanism during the sharing of sensitive information by outlining legal consequences for breaches.

Some common situations requiring NDAs include:

  • Business partnership discussions where private plans and processes must be reviewed
  • New employment where employees gain access to proprietary company data
  • Potential investment deals necessitating disclosure of trade secrets
  • Inventors vetting new product concepts with potential manufacturers
  • Client onboarding revealing sensitive customer information
  • Mergers and acquisitions involving review of confidential financial records

3. Essential NDA Components

For an NDA to be legally enforceable, certain key components must be present, which collectively contribute to the effectiveness and enforceability of the NDA, ensuring that all parties involved understand their roles and responsibilities.

To be legally enforceable, NDAs generally include:

  • Identified parties to the agreement
  • Definition of Confidential Information
  • Purpose and intended use of the Confidential Information
  • Timeframe for confidentiality
  • Confidentiality obligations of each party
  • Potential exclusions
  • Remedies for breaches
  • Dispute resolution and applicable law

4. What Situations or Circumstances Might Make an NDA Unenforceable?

While NDAs are generally enforceable when drafted and executed properly, there are instances where a court may deem an NDA unenforceable. Some common scenarios include:

Overly Broad Confidentiality Definition

If the definition of ‘confidential information’ in the NDA is too broad, covering non-confidential details, it may weaken the NDA’s enforceability.

Lack of Confidentiality

If the information covered by the NDA is already widely known or publicly available, it may weaken the NDA’s enforceability in respect of such information which is in the public domain.

Illegal Requests

If the NDA requires the employee to engage in illegal activities or violate legal obligations, it will be unenforceable.

Violation of Rights

If the NDA infringes upon the employee’s rights or is unconscionable, it may not be upheld by a court.

Understanding these potential pitfalls can help parties avoid drafting or signing unenforceable NDAs, while ensuring their legal protection is upheld.

Need help with NDAs? Let VAIOT assist you!

VAIOT is at the forefront of leveraging AI to streamline the legal process. Our AI Legal Assistant, currently in beta, automates tasks like NDA creation to benefit organisations of all sizes. The non-disclosure agreement template is nearing completion thanks to earlier efforts and will soon be available within the assistant interface.

By the end of April 2024, we will prepare twelve high-priority contract templates including employment agreements and intellectual property licensing documents provided by Grant Thornton, which the user would need to customise through VAIOT’s AI Assistant to cater for specific needs. VAIOT remains committed to empowering all parties with efficient, low-cost legal tools that foster secure information exchange and open new opportunities for progress.


In conclusion, non-disclosure agreements are indispensable tools for protecting confidential information and fostering trust in business relationships. Whether you are navigating partnership agreements, employment contracts, or investment deals, understanding the nuances of NDAs is essential for safeguarding your interests and ensuring compliance with legal obligations.


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