Non-disclosure agreement (NDA)
Learn what an NDA is, how one-way and mutual NDAs work, what to include, and the Irish rules that apply.
February 2024 | Published by Xero
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- A non-disclosure agreement (NDA), also called a confidentiality agreement, is a contract to keep specified information private
- A one-way NDA protects details that one party shares, while a mutual NDA protects details that both sides share
- A clear NDA commonly sets out the confidential information, its permitted use, any exclusions and how long protection lasts
- Irish law protects whistleblowers whatever an NDA says, and has set strict conditions for employment NDAs about discrimination or harassment since 20 November 2024
What is an NDA?
A non-disclosure agreement (NDA) is a contract that stops the people who sign it from sharing specified confidential information outside the agreement. It’s also commonly called a confidentiality agreement.
Every NDA has a disclosing party, who shares the information, and a receiving party, who agrees to keep it private. The agreement sets out exactly which details are protected, such as your financial figures or intellectual property.
Think of it like handing someone a key to your filing cabinet, along with written rules on which drawers they can open. If they break those rules, the NDA gives you a legal route to act.
Why businesses use NDAs
Businesses use NDAs so they can share sensitive details with outsiders and still keep control of them. Because the NDA spells out what’s covered, it removes guesswork and gives both sides the confidence to talk openly.
You might ask for an NDA when you’re:
- pitching your business plan to potential investors
- talking to a buyer or seller about a business sale
- briefing a supplier on a new product
- exploring a joint venture with another company
Types of NDA: one-way and mutual
NDAs commonly come in two forms, depending on who’s sharing information. Picking the right one keeps the obligations fair for everyone who signs.
A one-way, or unilateral, NDA suits situations where only you’re handing over sensitive material. For example, you might use one when hiring a freelancer to work on an unreleased product.
A mutual, or bilateral, NDA suits deals where both sides share private details, such as a merger discussion. Check that a draft labelled “mutual” places the same obligations on both parties, as some quietly favour whoever wrote them.
Examples of when businesses enter into NDAs
NDAs come up whenever businesses need to trust each other with valuable details. These common scenarios show how they work in practice.
One party asks another to sign an NDA
You might be asked to sign an NDA before a customer or collaborator shares sensitive details with you. Or you might ask another person or organisation to sign one before you share yours.
For example, a drinks company sharing its recipe with a contract manufacturer will secure an NDA first to protect that recipe. Likewise, a direct mail business may need to sign one before a charity hands over its list of high-profile donors.
NDAs in negotiations
Before agreeing a deal, two businesses may sign an NDA so they can review each other’s numbers. A manufacturer and distributor, for instance, may need to see each other’s financial statements to weigh up the risks and returns of a partnership.
NDAs in operating partnerships
Some organisations need an NDA to deliver a project together. For instance, a non-profit might partner with a tech company to build a government-funded app. They’d sign an NDA so they can swap data and insights throughout the project.
What to include in an NDA
A well-drafted NDA leaves no doubt about what’s protected and for how long. Most NDAs commonly cover:
- a clear definition of the confidential information
- the permitted purpose, meaning what the receiving party can use the information for
- permitted disclosures, such as to advisers who need to know or where the law requires it
- exclusions, often called carve-outs, for details that are already public, already known, independently developed or lawfully received from a third party
- the length of time the obligations last
- what happens to materials when the agreement ends, usually return or destruction
- the governing law and which courts handle disputes
Getting these terms right takes legal know-how. A solicitor can draft or review your NDA so it holds up if you ever need to rely on it.
What it means when businesses sign an NDA
When you sign an NDA, you agree to keep certain details within the circle the agreement allows. Breaking that promise can have legal consequences, so read every clause and ask questions before you commit.
You can generally share protected details with advisers acting on your behalf. That often includes your solicitor and your accountant or bookkeeper. But you’re typically responsible if an adviser leaks anything, so make sure the NDA spells out everyone’s obligations.
Staying compliant also means taking care with how and where you record protected material. Limit access to the people who need it, and store protected information securely.
Those obligations usually last for a defined period set out in the agreement. For ordinary commercial information, terms of 2–5 years are common, while trade secrets can justify longer protection.
What happens if you break an NDA?
Breaking an NDA is a breach of contract, so the other party can take legal action against you. Remedies commonly include damages, which is money to cover losses, and injunctions, which are court orders to stop further sharing.
Trade secrets get extra protection in Irish law. The European Union (Protection of Trade Secrets) Regulations 2018 (Statutory Instrument No. 188/2018) came into operation on 9 June 2018. They give trade secret holders civil remedies when someone acquires or uses their secrets unlawfully, including by revealing them.
So an NDA and the regulations work together. The contract sets out each party’s promises, and the law backs up your most valuable secrets.
What an NDA can’t do
An NDA protects information, but the law sets clear limits on how far it reaches. Knowing these limits helps you agree terms that hold up.
Intellectual property ownership stays separate
An NDA is designed to keep information private, so it isn’t the tool for deciding who owns intellectual property. If you need to assign or license rights, such as to a design or software code, you’ll typically need a separate agreement.
Whistleblowers keep their protection
The Protected Disclosures Act 2014, as amended by the Protected Disclosures (Amendment) Act 2022, protects workers who report wrongdoing from penalisation. The amended rules took effect on 1 January 2023 and cover workers in every sector, including not-for-profits. So an NDA can’t be used to punish someone for making a protected disclosure.
Employment NDAs about discrimination or harassment
Since 20 November 2024, stricter rules apply to employment NDAs about allegations of discrimination, victimisation, harassment or sexual harassment. The change came from the Maternity Protection, Employment Equality and Preservation of Certain Records Act 2024. Employers can now only agree these NDAs as part of a Workplace Relations Commission mediation settlement or as an “excepted” NDA.
According to Arthur Cox’s summary of the law and guidance from Mason Hayes & Curran, an excepted NDA has to meet strict conditions. These include:
- the employee requests the NDA
- the employee gets independent legal advice in writing before signing
- the employer pays the employee’s reasonable legal costs
- the agreement uses clear language
- the employee can withdraw within 14 days
- the employee can still speak to people such as the Gardaí or a legal representative
If you employ staff, build these rules into your wider employer responsibilities. Ask a solicitor to review any settlement terms before you offer them.
Keep your business finances organised with Xero
NDAs let you share sensitive details with confidence, and good preparation makes those conversations run smoothly. When an investor or partner asks to see your figures, having accurate reports ready helps you move quickly.
Xero brings your accounting data into an easy-to-read set of reports, so you can share up-to-date numbers whenever a deal calls for it. Explore the plans and get one month free when you sign up.
FAQs on NDAs
These answers cover common questions small business owners in Ireland ask about NDAs.
Are NDAs enforceable in Ireland?
Yes, NDAs are enforceable in Ireland when they meet legal requirements, such as using clear language. Terms that try to cover too much, such as information that’s already public, are harder to rely on.
Is a verbal NDA valid?
A written, signed NDA is the safer choice because it gives you clear evidence of what you agreed. Ask a solicitor before relying on any confidentiality promise that isn’t in writing.
Should you sign an NDA before sharing information?
Yes, get the NDA signed before you share anything sensitive. That way, every detail you hand over is clearly covered from the start.
What should you do if someone breaks your NDA?
Keep a record of what you shared and when, then speak to a solicitor quickly. Acting fast helps if you need an injunction to stop the details spreading.
Can employers ask staff to sign NDAs?
Yes, employers commonly use confidentiality clauses or separate NDAs to protect business information such as client lists. The whistleblowing and employment equality rules still apply to these agreements.
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.