What is an NDA?
Learn what a non-disclosure agreement (NDA) is, the types of NDA, and when businesses use one in South Africa.
February 2024 | Published by Xero
Published Wednesday 12 August 2026
Table of contents
Key takeaways
- An NDA (non-disclosure agreement) is a legally binding contract that keeps specified information confidential and limits how it can be used.
- The main types are unilateral (one-way), mutual (two-way) and multilateral NDAs.
- A strong NDA clearly defines the protected information, its permitted use, the duration of the obligation and the remedies for breach.
- In South Africa, an NDA is generally enforceable when it is a valid contract with clear, lawful and reasonable terms.
What is a non-disclosure agreement (NDA)?
An NDA (non-disclosure agreement, also called a confidentiality agreement) is a legally binding contract that commits the people or organisations who sign it to keep specified information confidential and use it only for an agreed purpose.
Businesses use NDAs to protect financial information, intellectual property and data that would lose value if shared publicly. The agreement specifies exactly what information is covered, who can access it and how it may be used. NDAs often feature early on, when you are starting a business and bringing partners or suppliers on board.
By removing ambiguity, an NDA gives signatories the confidence to have open conversations. Both parties know what they can share, what stays private and what happens if someone breaks the rules.
Types of non-disclosure agreement
NDAs come in different forms depending on who needs to keep information confidential.
- Unilateral (one-way) NDA: one party shares confidential information and the other agrees to protect it
- Mutual (two-way or bilateral) NDA: both parties share confidential information and both agree to protect what they receive
- Multilateral NDA: three or more parties share confidential information under a single agreement, reducing the need for separate bilateral contracts
When businesses use an NDA
Businesses sign NDAs whenever confidential information needs to change hands.
- Before sharing sensitive information with a customer, collaborator or contract manufacturer (for example, protecting a recipe or a donor mailing list)
- During negotiations, when two businesses review each other's financial statements
- In operating partnerships delivering a project together
- With employees and contractors who will access proprietary systems or data
- With investors during funding discussions
- During mergers, acquisitions and due diligence
- With suppliers and during product development, where you may also want to protect your brand and trade marks
What a strong NDA should include
A well-drafted NDA sets clear expectations and holds up if it is tested in court.
- A clear definition of the confidential information covered
- The permitted purpose for using that information
- Exclusions for information already public or independently known
- The duration of the confidentiality obligation
- How information must be handled, stored and returned or destroyed
- The remedies for breach
- The governing law and jurisdiction
A poorly drafted agreement may not hold up, so it is worth having a qualified attorney draft or review it.
NDA versus a confidentiality agreement and a non-compete
An NDA and a confidentiality agreement are generally the same thing; the names are used interchangeably.
An NDA differs from a non-compete (also called a restraint of trade in South Africa). An NDA controls the use and disclosure of information. A non-compete restricts where or for whom someone can work after leaving a business.
An NDA cannot stop someone using their own general skills and experience to earn a living. It protects specific confidential information, not broad know-how.
Are NDAs enforceable in South Africa?
Yes, an NDA is generally enforceable in South Africa as a contract, provided it meets the normal requirements of a valid agreement: offer, acceptance, an intention to create legal obligations and capacity to contract. The terms must also be clear, lawful and reasonable.
Courts assess whether the NDA is reasonable and not contrary to public policy. An NDA cannot be used to:
- silence a protected disclosure (whistle-blowing)
- override data-protection duties under the Protection of Personal Information Act (POPIA)
A business can usually share protected information with its lawyer or accountant, but is typically responsible if that agent leaks it. Consult a qualified attorney for advice on your situation.
What happens if someone breaches an NDA
If someone breaches an NDA, the injured party can seek legal remedies to limit the damage and recover losses.
- An urgent interdict (court order) to stop further disclosure or use
- A claim for damages where financial loss can be shown
- Other contractual consequences set out in the agreement
Being careful about how and where confidential information is recorded reduces the risk of an accidental breach. Cloud tools with strong data security help you control who can access sensitive records.
Keep your business information organised with Xero
An NDA protects the information you share, and good record-keeping protects the information you hold. Xero's cloud accounting software keeps your financial records secure and organised in one place, with bank-level encryption and controlled access for the people you choose. Try Xero and get one month free to see how it fits your business.
FAQs on NDAs
Here are answers to some common questions about non-disclosure agreements in South Africa.
How long does an NDA last?
An NDA lasts for the period set out in the agreement, which can be a fixed number of years or for as long as the information stays confidential. Trade secrets are often protected indefinitely, so it is worth agreeing the duration up front.
When should you use a mutual NDA instead of a one-way NDA?
Use a mutual NDA when both sides will share confidential information, such as two businesses exploring a partnership. A one-way NDA is enough when only one party is disclosing information.
Can an NDA stop an employee from working for a competitor?
No, that is the role of a non-compete or restraint-of-trade clause, not an NDA. An NDA only restricts the use and disclosure of confidential information, not where a person can work.
Do you need a lawyer to draft an NDA?
You are not required to use a lawyer, but a qualified attorney can make sure the agreement is clear, reasonable and enforceable. A poorly drafted or generic template NDA may not protect you when it matters.
What information cannot be protected by an NDA?
An NDA cannot protect information that is already public, independently developed or lawfully obtained elsewhere. It also cannot override a protected disclosure or your duties under POPIA.
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.