It may seem trivial at first glance, but the question of what an NDA is really for deserves to be asked. Looking back over many years of professional practice, and after questioning solicitors, in-house counsel, company directors and peers alike, the verdict is unanimous: not one of the people contacted has ever faced a dispute turning mainly on an NDA! So how do we explain that, all over the world, companies pour so much energy (according to one study, 63% of the contracts reviewed in the USA are NDAs, yet they contribute only 7% of revenue) into covering a risk whose probability of occurring is… extremely low?
Having already set out the main points to watch in NDAs, this article offers a practical view of what an NDA is really for, the cases where putting one in place genuinely makes sense, the cases where companies could do without one, and a few practical tips to simplify and speed up a confidentiality agreement process that can sometimes feel like an assault course!
I. The origins of the NDA
Let us start at the beginning. Everyone talks about the NDA, but who really knows where it comes from?
Bad news: very little has been written about the birth of non-disclosure agreements (or NDAs), and no great figure of the law is associated with them (unlike, say, Portalis for our French Civil Code). A few texts dealing with the birth and evolution of the NDA can nonetheless be found. There are some interesting lines, for example, in an article entitled Contracts of Silence published in the Columbia Journalism Review. According to that article, the first mentions of NDAs date back to the 1940s, in a very particular context: maritime law… in the United States. Like many tools and concepts in contract law, the NDA reached us from across the Atlantic. Confidentiality was already an important subject at the time, and the American courts had had occasion to uphold the use of non-disclosure clauses for admirals, notably to guarantee the confidentiality of information gathered during interrogations!
NDAs then gradually spread into other sectors from the 1980s onwards, in the wake of the rise of high-technology companies. Still in the United States, companies such as IBM were among the first to make heavy use of NDAs to protect their trade secrets, proprietary algorithms and innovations, at a time when confidentiality was a major strategic asset. The NDA then spread at internet speed to occupy the place we know today: that of the basic tool of any business relationship.
This short introduction to the origins of NDAs reminds us that the instrument was born with a fairly clear purpose: protecting strategic information, first in a military setting, then in innovative, highly competitive sectors. It later became extremely common, put in place ahead of meetings or other informal exchanges where the only confidential information shared is sometimes the guest wifi password. In short, the NDA reflex (virtuous to begin with) at times becomes a genuine symbol of bureaucracy.
As the aim of this article is not to shoot the NDA down in flames, let us move on to a section on the good reasons for putting an NDA in place. Used wisely, the NDA has real merits!
II. A few good reasons to put an NDA in place
Taking a critical view does not mean turning a blind eye to the reasons why signing an NDA is sometimes essential. For the purposes of this section, we have listed three good reasons to enter into a confidentiality agreement:
A. To protect your assets
Protecting your assets does not only mean safeguarding physical or financial assets; it also means protecting the strategic, sensitive information that makes up a company’s intangible value. Some valuable information (unique know-how, manufacturing secrets or specific processes) does not yet enjoy any particular legal cover. In that context, an NDA proves an essential tool for guaranteeing the confidentiality of those items, particularly during negotiations or pre-contractual exchanges.
When preliminary discussions begin with potential partners, suppliers or customers, confidential data often has to be shared. That information may include elements of development strategy, sensitive commercial data or internal financial information. Without an NDA, the company runs the risk that this information, once disclosed, is used or passed on without its knowledge, putting its interests in jeopardy.
A confidentiality agreement can therefore protect those assets by framing how the information is circulated and used. It creates a legal framework in which the parties undertake not to disclose or exploit the information exchanged for personal or commercial purposes, on pain of sanctions.
B. To protect the patentability of your inventions
This second reason is a little less well known, and yet essential! Novelty is one of the criteria for the patentability of an invention (see Art. L.611-1 of the French Intellectual Property Code). For that criterion to be met, the invention “must not relate to an innovation that has already been made available to the public”, according to the INPI, the French intellectual property office.
Yet in the early phases of an invention’s lifecycle it is very common for exchanges to take place with suppliers, partners, customers and other third parties, in particular to check the feasibility of the innovation (which helps validate another criterion, that of industrial application). If those exchanges are not covered by an NDA, they may amount to disclosure to the public and therefore destroy a criterion that is nonetheless indispensable to the patentability of an invention.
Among the most common illustrations of unintentional disclosure not covered by an NDA are conferences, presentations and scientific symposiums, where speaking and circulating slides on the latest advances or innovations is standard practice. Disclosing in those circumstances an innovation that has not yet been the subject of a patent application, without taking the precaution of entering into an NDA, is then highly likely to harm the patentability of that innovation.
c. To start a business relationship
The NDA is often the first contract signed between parties contemplating working together, whether customers, suppliers or potential partners. Its simplicity makes it an accessible document for framing the first exchanges of confidential information. Putting an NDA in place formalises the start of a relationship and lays the groundwork for a more structured and official approach (without prejudging whether a future relationship will exist). It shows, early on, that you are serious and keen to explore a possible collaboration.
The confidentiality agreement can also help build a climate of trust and reassurance. By showing that you take the protection of sensitive information seriously, you lay the foundations of a relationship in which mutual respect for each side’s interests is valued. By setting out each party’s expectations and obligations, the NDA becomes a tool that eases exchanges and encourages openness, while limiting the risk of information leaks. It invites open discussion while protecting the confidential framework of those discussions.
Be careful, though, not to turn the NDA into an obstacle! An NDA that is too long, too complex, or full of one-sided and/or excessively technical clauses can have the opposite effect. If negotiating the agreement proves long and painful, your counterpart may read it as a foretaste of the company’s internal processes, with a bureaucracy that slows exchanges down. It is therefore essential to keep the NDA concise and relevant, so that it helps get a collaboration started rather than raising barriers from the very first contact.
III. Why signing NDAs for everything is a false good idea
a. The baseline protection of general law
The law already protects the exchange of information covered by trade secrecy, without any need for an NDA. In France, for example, the French Commercial Code (Articles L.151-1 et seq.) contains specific provisions protecting sensitive information qualifying as trade secrets. This means that once information is identified as strategic or valuable to the company, it benefits from legal protection prohibiting any disclosure or improper use, even with no NDA in place.
Similar provisions exist in employment law, where duties of discretion and loyalty apply to employees and limit the circulation of information internal to the company. That duty of loyalty means an employee may not share or use confidential information obtained in the course of their work, even in the absence of an NDA. It is an important protection that completes the legal framework and shows that confidentiality is inherent in the employment relationship.
Finally, to return to business, the French Civil Code adds a further layer of protection by imposing liability on anyone who uses or discloses, without authorisation, confidential information obtained during pre-contractual negotiations. This general rule of civil liability provides minimum cover for companies and individuals in their dealings.
In short, while an NDA can strengthen the protection of certain information, it is worth noting that general law already offers a sufficient protective framework in many cases, particularly for information clearly identified as confidential or covered by trade secrecy. The NDA should therefore not be used for everything, but rather brought out once you have asked yourself the right questions about why you are putting it in place.
b. Signing a piece of paper… then letting things slide
In many organisations, putting an NDA in place is a heavy and tedious process, involving rules and negotiation steps that are sometimes highly bureaucratic. That process can be a source of frustration for staff, all the more so because in many cases, once signed, the NDA ends up disappearing into a drawer, a cloud folder or some other digital archive, with nobody paying it any further attention. The clauses of the document, carefully negotiated though they were, are then forgotten and rarely, if ever, consulted when a doubt or a need arises.
In practice, as soon as the NDA is signed, confidential information tends to be handled loosely. Sensitive, even classified, data starts circulating with no specific framework: it is neither identified nor strictly tracked. It sometimes passes through many hands with no precautions taken to guarantee its traceability or integrity. This drift after signature of the NDA is in fact counter-productive. Protecting sensitive information effectively takes more than relying on a few pages of legal clauses.
At Prime Conseil, we believe efforts should focus on putting active protection of sensitive information in place. Rather than relying on the mere fact of signing an NDA, real protection means restricting access to information, marking it clearly as confidential and sharing it only where absolutely necessary, on a strict “need-to-know” basis. That stops the NDA from becoming a simple piece of paper with no real effect, and strengthens information security day to day.
c. Overlap with other contractual provisions
On many projects, it is not unusual to see NDAs signed with retroactive effective dates, immediately followed by purchase, sale or partnership contracts that themselves contain confidentiality clauses, often identical in every respect to those of the NDA. This duplication of confidentiality undertakings adds needless complexity, with several contractual documents repeating the same provisions a few days apart.
Rather than applying processes mechanically, it is worth asking how these clauses could be rationalised. If an NDA was entered into to secure the first exchanges of sensitive information, it may become superfluous once the main contract comes into force, since that contract often already includes all the necessary protections. Reproducing the same confidentiality clauses in every contractual document does not necessarily make information more secure; on the contrary, it makes the process heavier without adding real value.
By avoiding this overlap, companies can simplify their contracting steps and lighten both the process and the content of the contracts, so as to focus on what matters: effective and relevant protection of information. Rationalising confidentiality clauses, rather than multiplying agreements, not only improves efficiency but also clarifies each party’s obligations, while reducing the risk of confusion or inconsistency between documents.
IV. How to speed up putting NDAs in place
a. Stop using one-way NDAs
Unilateral NDAs are among the most questionable practices in confidentiality agreements. They often reflect a clumsy attempt to exploit an imbalance of power, with one party imposing its own protection without reciprocity. Yet in the vast majority of cases both parties exchange confidential information. Whether assessing partnership opportunities, discussing technical solutions or sharing financial projections, it is rare for only one party to act as discloser. Opting for a unilateral NDA therefore means saddling yourself with a model that does not match the reality of the exchanges.
By protecting only one party’s information, a unilateral NDA can even create a climate of mistrust and cool the other side’s commitment, as they may read the approach as a lack of consideration. That runs counter to the NDA’s original purpose: protecting exchanges while establishing a framework of trust.
Unless exceptional circumstances justify a unilateral NDA, it is better to file that template away and replace it with a mutual agreement. By choosing a mutual NDA, you show fairness and pragmatism, and encourage a more balanced and productive collaboration.
b. Draft your contracts as one-pagers, in plain language
In recent years NDAs have had an unfortunate tendency to grow, some running to ten pages or more, to the dismay of many buyers, salespeople and even contract managers! Yet the fundamental aim of these agreements remains simple: protecting the sensitive information exchanged. So why all the complexity? In reality, with a little ingenuity and rationalisation, an NDA can fit on a single double-sided sheet while remaining effective and complete, a challenge we have already met.
The key lies in clear, accessible language that makes the document easy to read and understand for everyone involved. A concise NDA, written in simple terms, limits approval round trips and reduces the blockages caused by heavy technical and legal wording. Adopting a one-pager format produces a document that is easy to read, easy to approve and, above all, easy to understand. This approach turns what is often seen as an administrative chore into a simple formality, making the NDA process faster and more pleasant for every stakeholder.
c. Use universal templates
Instead of reinventing the wheel with every NDA, why not adopt a template already used by a large number of organisations? Initiatives such as OneNDA, launched in 2020 and backed by more than 1,000 organisations, show how effective this approach can be. With big names such as Coca-Cola, Google, UBS, Cazoo and Diageo among its supporters, OneNDA offers a simple and widely accepted standard for confidentiality agreements. Since taken up by LawInsider, the template provides a stripped-back, effective NDA validated by a broad community of players, which reinforces its legitimacy and acceptability.
Adopting standards such as OneNDA simplifies the process of putting an NDA in place by significantly cutting negotiation and approval time. As well as being clear and concise, this standardised template reduces the friction points that so often slow down the signature of a conventional NDA. Taking advantage of it not only speeds up the process but also lets you rely on an agreement recognised by major organisations, building the parties’ confidence from the very first exchanges.
d. Set up a framework with your recurring partners
With every one of our clients, it would be easy to draw up a “top 10” (then extend it to a “top 30”) of customers, suppliers and partners with whom there is significant, recurring business. Yet in most cases each new project or topic with those partners triggers a new NDA. At best, someone borrows from an NDA negotiated previously, but we rarely see any attempt to standardise these contractual relationships with regular partners.
Setting up framework NDAs, supplemented simply by project-specific “one-pagers” or “data sheets”, would settle the confidentiality terms between the parties once and for all. With the confidentiality framework defined, project teams and operational staff could freely put in place project sheets attached to that framework NDA, without going through tedious negotiation cycles. This approach would not only streamline exchanges but also bring greater autonomy and responsiveness to project management. Standardisation of this kind brings fluidity and clarity while safeguarding the information exchanged, for calmer and more efficient collaboration with trusted partners.
Conclusion
In conclusion, the NDA is not the universal answer to every confidentiality challenge: it is a tool, to be used with judgement. What matters is adopting a simple and accepted template at the right moment: neither too early nor too late, and certainly not for anything and everything. Managing NDAs well means avoiding needless bureaucracy and focusing on genuinely protecting strategic information, taking care to rationalise the processes along the way. That saves time, money… and often a few nerves in the process!