NDA (non-disclosure agreement)
Learn what an NDA is, what to include in one and how NDAs work under Indonesian law.
February 2024 | Published by Xero
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- A non-disclosure agreement (NDA) commits everyone who signs it to keeping specified information private
- In Indonesia, an NDA binds its parties when it meets the four validity conditions in Article 1320 of the Civil Code
- A breach can lead to a civil claim, and leaking a trade secret can also bring criminal penalties under Law No. 30 of 2000
- A clear NDA defines the protected information and sets how long the obligations last, so everyone knows where they stand
What is an NDA?
A non-disclosure agreement (NDA) is a contract that commits everyone who signs it to keeping specified information private. Signatories agree to keep that information within the group covered by the agreement.
NDAs can protect financial information, client and supplier lists, product designs and recipes. The World Intellectual Property Organization (WIPO) lists these as potential trade secrets. Because the agreement spells out exactly what’s covered, both sides can talk openly without second-guessing what’s safe to share.
Think of an NDA like lending someone your storeroom key with a signed note. The note lists what they can look at and who they can tell. If they share what’s inside, that note is your proof of what they promised.
Types of NDA
Most NDAs fall into two types, depending on who’s sharing the information. Picking the right one keeps the obligations fair and easy to follow.
A one-way (unilateral) NDA protects information that only one party shares. It suits situations such as pitching a startup idea to potential investors, or giving a contractor access to your product designs.
A mutual NDA protects information flowing in both directions. It fits partnerships and deal negotiations, where each business opens its books to the other.
If you’re unsure which you need, map out who will share what. When both sides will hand over sensitive material, one mutual NDA saves you drafting two separate agreements.
Examples of when businesses use NDAs
Businesses sign NDAs whenever sensitive information needs to change hands. These common scenarios show how an NDA works in practice.
Sharing information with a supplier or collaborator
You might ask someone to sign an NDA before you share sensitive details, or sign one yourself before a customer shares theirs. For example, a drinks company could ask a contract manufacturer to sign before handing over its recipe.
Similarly, a direct mail business might sign an NDA before a charity shares its mailing list of high-profile donors. The charity then has written assurance that its donors’ details stay protected.
Negotiations and due diligence
Before agreeing a deal, businesses often need to see each other’s financial information. An NDA lets them share those numbers during due diligence while keeping the details away from competitors.
For example, a manufacturer and a distributor might sign a mutual NDA before swapping sales figures and costs. Both can then assess the risks and returns of a partnership with the full picture.
Operating partnerships
Some NDAs cover a working relationship that lasts months or years. For example, a non-profit might partner with a tech company to build a government-funded app.
The two organisations would share data and insights throughout the project. An NDA sets the rules for that information from day one until the partnership ends.
Hiring staff or freelancers
New team members often see customer lists and pricing you’d rather keep in-house. An NDA, or a confidentiality clause in the employment contract, sets out what they must keep to themselves.
The same applies to freelancers and independent contractors, who may work for several businesses at once, including your competitors. Ask them to sign before they start so the terms cover everything they see.
What to include in an NDA
A well-drafted NDA leaves little room for argument about what’s protected. WIPO recommends clearly identifying the confidential information, its authorised use and any exclusions in its guide to trade secret management.
Most NDAs include these core clauses.
- A definition of the confidential information, listed by specific item or by category
- The full legal name of each party, matching its registered business structure
- The permitted use of the information and each party’s duty to protect it
- Rules for sharing with agents, such as a lawyer or an accountant or bookkeeper
- Exclusions for information that’s public, already known to the recipient, independently developed or required by law to be disclosed
- How long the obligations last, including after the relationship ends
- Remedies for a breach, plus the governing law and forum for settling disputes
Agents can generally see protected information, but the business that passed it on is typically responsible if they leak it. Make those obligations explicit so everyone in the chain knows the rules.
If your NDA covers personal data about customers or employees, Law No. 27 of 2022 on Personal Data Protection also applies. Its transition period ended on 17 October 2024, so businesses must now fully comply, according to DLA Piper’s Indonesia data protection summary.
Are NDAs legally binding in Indonesia?
Yes. An NDA is binding in Indonesia when it meets the contract rules in the Kitab Undang-Undang Hukum Perdata (KUHPerdata), Indonesia’s Civil Code.
As Hukumonline’s legal clinic explains, Article 1320 sets four conditions an NDA must meet to be valid.
- Both parties agree to the terms
- Each party has the legal capacity to make a contract
- The agreement covers a specific subject matter
- The agreement has a lawful purpose
Once those conditions are met, Article 1338 treats a validly made agreement as law for the parties who made it. Each signatory is then bound by the NDA’s terms.
Language matters too. Article 31 of Law No. 24 of 2009 requires agreements involving an Indonesian party to be in Bahasa Indonesia, with a bilingual version when a foreign party is involved.
The Supreme Court has since said a missing Indonesian version doesn’t automatically void a contract unless it results from bad faith, according to analysis by Hogan Lovells Cadwalader. A bilingual NDA is still the safest choice when you work with overseas partners.
You can also sign an NDA electronically. The Information and Electronic Transactions (ITE) Law, as amended by Law No. 1 of 2024, confirms electronic contracts are binding, as SSEK Law Firm reports.
Certified electronic signatures are mandated for certain high-risk transactions. A standard business NDA can typically be signed electronically without one.
What happens if an NDA is breached?
If someone breaks an NDA, you can bring a civil claim for breach of contract. When the leaked information is a trade secret, Indonesia’s trade secret law gives you extra options.
Under Law No. 30 of 2000 on Trade Secrets, Article 13 treats deliberate disclosure as infringement. Breaking a written or unwritten confidentiality obligation also counts.
Article 11 lets the owner sue for damages and ask the court to stop the infringing acts. Article 17 adds penalties of up to 2 years’ imprisonment and/or a fine of up to Rp300 million.
The Article 17 offence is complaint-based, so prosecution starts only when the owner files a complaint. That puts the decision to pursue criminal action in your hands.
Separately, the new national Criminal Code (Law No. 1 of 2023) took effect on 2 January 2026, according to the Ministry of State Secretariat. It has its own provision on disclosing secrets, which sits alongside the trade secret law.
Legal remedies help after the fact, so the best protection is making a breach unlikely. These habits keep protected information under your control.
- Record and store protected information carefully, with clear labels showing what the NDA covers
- Restrict access to the people who need the information for their work
- Keep a log of who received each document and when
- Ask a qualified lawyer to draft or review your NDA, because a poorly drafted agreement may not be enforceable
NDA vs MOU
A memorandum of understanding (MOU) is typically a preliminary document that lets parties study a deal before signing a detailed contract. An NDA exists specifically to create confidentiality obligations.
An MOU can still bind the parties if it meets the Article 1320 conditions, as Hukumonline’s MOU explainer notes. The two documents usually differ in these ways.
- An MOU usually records broad intentions early on, while an NDA sets precise duties from the day it’s signed
- An MOU tends to cover the wider deal, such as roles and next steps
- An NDA focuses only on what information stays private and for how long
- You can sign an NDA before or alongside an MOU so early talks can include sensitive details
Keep your business records organised with Xero
An NDA protects the information you share, and good record-keeping supports the business behind it. With organised financial records, you can give a partner or investor exactly what they need to assess a deal.
Xero brings your accounting data into easy-to-read reports, and you can work with your advisor in real time. Try Xero today and get one month free.
FAQs on NDAs
Here are quick answers to more questions about NDAs.
Is an NDA the same as a confidentiality agreement?
Yes, both names describe the same kind of contract. WIPO’s trade secret guidance uses the two terms interchangeably.
How long does an NDA last?
An NDA can run indefinitely or end on a date set in its duration clause, as Cornell Law School’s Legal Information Institute notes. For trade secrets, consider keeping the obligation running for as long as the information stays secret.
Can an NDA cover an employee after they leave?
Yes, if the NDA includes obligations that continue after employment ends. Spell this out in the duration clause so former staff know exactly what they must keep private.
What counts as a trade secret in Indonesia?
Under Law No. 30 of 2000, a trade secret is technology or business information that isn’t publicly known, has economic value and is kept confidential by its owner. Keeping it confidential is part of the definition, so your storage habits matter as much as your NDA.
Can I use an NDA template?
A template is a good starting point for drafting. Tailor it to your deal and have a qualified lawyer check it against Indonesian law before anyone signs.
Related terms
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.