Are NDAs actually binding?


Love them or loathe them, non-disclosure agreements or NDAs are sometimes needed to protect your business secrets.  You might be building your site in 'stealth mode'; or looking to patent your technology; or open your books to a potential buyer - these are a few examples when an NDA comes into play.

But a lot of start-ups ask us: "Are NDAs actually binding?".  The short answer is yes.  NDAs generally stop someone from disclosing your confidential information to other people for a certain period of time (e.g. 1 or 2yrs).  And if they spill the beans, they agree to pay you for the damage they've caused.

If however, if it's not 100% clear in your NDA who that 'someone' is (is it Richard Branson, or Richard Branson Pty Ltd?); or what information is actually confidential; or how long they need to keep the information under wraps, then your NDA may lose its effect.

It may seem obvious, but your NDA must actually contain a promise to keep your information confidential.

The main exclusion kicks in when that confidential information becomes public, so long as it didn't become public because of you!  Also, it's often necessary for people to share your information with their advisors or work colleagues, which you'll need to allow for.

Of course all these rules only apply so long as they're clearly written in your NDA.  If so, you're all set to share your secrets to success with a binding NDA, just don't whip it out every time you're brainstorming over a skinny flat white!