A Non-Disclosure Agreement (NDA) is an essential legal document in today’s fast-paced business world, especially when sensitive information needs to be shared. If you’re wondering how to navigate NDAs effectively, or looking to automate the process for your business, you’re in the right place. In this guide, we’ll cover the basics of NDAs, their types, when they’re used, and how you can streamline the process using ContractLoom.

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What is a non-disclosure agreement (NDA)?

A Non-Disclosure Agreement (NDA) is a legally binding contract that establishes a confidential relationship between two or more parties, enabling them to share sensitive business information securely. NDAs help businesses protect proprietary data, trade secrets, and sensitive information during discussions with partners, clients, investors, and employees.

NDAs are also known by other names, including:

• Confidentiality Agreement (CA)
• Confidentiality Disclosure Agreement (CDA)
• Secrecy Agreement (SA)
• Proprietary Information Agreement (PIA)

The main goal of an NDA is to ensure that sensitive information doesn't fall into the wrong hands—such as competitors or unauthorized third parties.

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Types of NDAs

NDAs come in different forms depending on the nature of the relationship between the parties involved. Here are the main types:

Mutual NDA

This type is used when both parties intend to share confidential information with each other. For example, two businesses exploring a potential partnership may use a mutual NDA to ensure both sides’ sensitive information remains protected.

Unilateral NDA

In this scenario, only one party discloses confidential information while expecting the other to maintain confidentiality. This is common in situations like hiring a contractor or consultant.

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What is the purpose of a non-disclosure agreement?

The purpose of an NDA is to create a clear framework for sharing, accessing, processing, and protecting confidential information between parties. Key considerations include:

• Defining the scope of confidential information: Identifying what information is considered confidential and what is not.‍
• Accessibility of confidential information: Specifying how confidential information can be shared, where it should be stored, and procedures in case of a security breach.‍
• Processing the information: Determining how the information will be used and who has access.‍
• Protecting the information: Establishing legal obligations to protect information and defining what constitutes a breach of contract.

When are NDAs used?

NDAs are often used at the start of a business relationship. Here are some common scenarios:

• With a business partner: During the exploration of a partnership
• With an Investor: During fundraising or M&A discussions.
• With a customer: At the beginning of a project, especially when sharing sensitive project data.‍
• With employees or contractors: To protect business-sensitive information.

Key facts about NDAs

1. High Volume: NDAs are the highest volume contracts managed by most businesses.
2. Time-Consuming: Drafting, reviewing, and managing NDAs can take up 15-30% of an in-house legal professional’s time.
3. Costly: The cost of managing an NDA can range between $200 - $1,500 per document.

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Automate your NDA process with contractLoom

ContractLoom offers a template feature that allows businesses to create reusable templates for contracts they frequently use, including NDAs. By assigning variables to key fields, businesses can quickly customize contracts for different clients or partners, making the contract creation process much faster and easier. This eliminates the need to start from scratch each time.

In addition, ContractLoom provides access to a marketplace where users can download a variety of contract templates, including NDAs, employment agreements, sales contracts, and more.

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Roll out your first NDA with contractLoom

With ContractLoom, creating an NDA is easier than ever. Get started with an all-access trial and create your NDA in just three simple steps:

1. Select  NDA template from the marketplace or create a new one by heading to Library and then Templates.
2. Assign variables for dynamic inputs.
3. Set the workflow for approvals, gather counterparty information, and send it for signatures.

Our 14-day trial is commitment-free, so you can explore the platform and see how our features can streamline your contract management.

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About contractLoom

ContractLoom is a digital Contract Lifecycle Management (CLM) platform designed to help organizations streamline their contracting processes. Our CLM solution uses machine learning and AI to enhance the contracting experience, allowing for:

• Faster Contracting: Improve your speed of contracting without compromising compliance.
• Enhanced Collaboration: Collaborate more efficiently, route tasks to the right individuals, and extract key insights from documents.
• Versatile Contract Types: Manage a variety of contracts, such as NDAs, sales agreements, employment contracts, and more.

With ContractLoom, managing your contracts has never been easier—whether it’s automating NDAs or complex sales agreements, our platform is designed to help businesses thrive.

Get started today with contractLoom

Ready to take control of your contracts? Start your free trial today and see how ContractLoom CLM can transform the way you manage NDAs and other business agreements.

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