1. Home
  2.  | 
  3. Business Law
  4.  | Understanding mutual and non-mutual NDAs

Understanding mutual and non-mutual NDAs

by | Feb 17, 2020 | Business Law

Business owners rely on the validity of a nondisclosure agreement (NDA) to protect their information from competitors. However, choosing an NDA format that fits a business’s needs can be challenging. That’s why NDAs typically come in two different formats: mutual and non-mutual. Companies entering either of these agreements must know what they’re getting into, as each format has different variables.

What’s the difference between the two?

Non-mutual NDAs are a one-way agreement. That means only one party discloses confidential information to the other. This transaction occurs when businesses use outside services that access private data. For instance, a company may use an outside marketing agency to promote brand awareness; the firm may need access to confidential info like customer data and account passwords to do their job.

Mutual NDAs get used when both parties disclose private information. These types are typically for mergers and acquisitions. However, some may be hesitant to use them depending on the amount of data each party wants to give up.

Both share similar exclusions

Despite their differences, the rules for NDA exclusions apply to both. That’s because some information is too burdensome for parties to disclose. Here are a few examples:

  • Information that’ already known to the recipient.
  • Information that’s already known to the public.
  • Information disclosed to a recipient by another party who has no confidentiality obligations.

Drafting these agreements can be complicated

Businesses know that protecting their most crucial data keeps them from getting hurt by their competitors. That’s why they need to know what types of confidentiality agreements fit their business needs.