Non Disclosure Agreements Use

Top 5 instances to use a Non-Disclosure Agreement (NDA)

In Blog, Contracts 101, Independent Contractors by Shannon Montgomery

As a business owner and entrepreneur, you are likely to come across many instances where sharing confidential information is a necessity. Things like client lists, buying practices, and even social media passwords and accounts might all be information you need to share, but would want to keep protected. In order to preserve that information as confidential, many businesses utilize Non-Disclosure Agreements or NDA’s.

I previously wrote about them in this article but I didn’t get too in depth in situations I think they are definitely needed. NDA’s are a great mechanism to have in place when you want to share highly valuable information about your business with another party, and you want to ensure they do not use that information without your approval, or worse, steal it from you.

Let’s go over five of the most frequent situations that need an NDA in place.

  1. When employees or independent contractors have access to confidential information:

 It is almost certain that your employees and even independent contractors (IC) you work with will have access to things like your client lists, passwords, marketing strategies and plans and so on. These are all things that are invaluable to your business and must be protected prior to that person gaining access to the information. Have an attorney draw up an NDA that is specific to your business, and the information and access each employee or IC will have access to. Have them sign it as part of the onboarding process with your business or team. Even if that team member is your mother, have an NDA in place. You are preparing to protect your most valuable assets from an employee or IC leaving your business and starting their own with your confidential information. Even though that may never happen, it is better to be safe than sorry.

  1. When presenting business plans or offers to future partners or investors:

 If you are a startup company you may want to tread lightly on the NDA subject as many venture capitalists shy away from signing. However, it is not to be overlooked or disregarded by more established businesses seeking to bring in a new partner or breathe life into a project through investment.  You will likely discuss a lot of confidential information about the business and your plans while speaking with anyone who might invest or join you at your business. Have a properly drafted NDA signed by all parties prior to having any discussions with them. Be careful not to share confidential information with anyone that has not signed a non-disclosure, as it could render the information non-protectable in the future. Just keep that one in the back of your mind when speaking with multiple parties about your businesses proprietary information.

  1. When you outsource any software or web development work:

 While this might fall under situation one, it is important enough to discuss on its own. Most businesses are forced to outsource any software or web development work to outside parties. Say you want to create your own app for your online fitness coaching platform but don’t know how. There are people for that, and those people need to sign NDA’s. You might be creating a new technology or working on a completely new business concept, in this situation a non-disclosure will be very important for you.

  1. When you work with a third party to accomplish something within your business:

 There may come a time when you hire a consultant to help with marketing or business growth. Those services often require the disclosure of quite a bit of personal business information that must be protected. Anytime you need to give access to email addresses, customers, potential customers, social media platforms etc. having that NDA in place will keep it safe and protected from the third parties use.

  1. When and if you decide to buy or sell a business:

 Mergers and acquisitions aren’t just for fortune 500 companies. A small or medium-sized business may decide to buy or sell one day. If you do, you will be required to share every bit of information about your company. All financial, operational, and personal information will be revealed to a potential buyer when selling. Always, I repeat, always have an appropriate NDA in place when this information is shared. This is important in the event the “potential buyer” isn’t as earnest about the purchase of your business. Most companies will opt to use a broker that will require proof of funds, an ability to close on the deal, and the NDA prior to the information being revealed. A smaller business might try to avoid a broker fee, so having that NDA signed is a good first step in making the deal.


I hope this gives you some great insight on when to utilize an NDA in your business. Please note this list is nowhere near exhaustive and there are many situations where I would advise a client to get one in place before moving forward on something. That said if you have questions about a particular situation you’re in feel free to reach out via the site or email me at

Looking forward to hearing from you!


Please note that this is not meant to be legal advice for you or your situation, this is merely some legal research and knowledge on the given topic.