Non-disclosure agreements (NDAs) are among the most frequently used commercial documents in business, yet they are also among the most misunderstood. Businesses often assume that all NDAs perform the same function. In practice, selecting the wrong type of NDA can create commercial risk, weaken protection for intellectual property and confidential information, and complicate negotiations unnecessarily.
Whether the discussion concerns a potential investment, a technology partnership, an acquisition opportunity or an employment relationship, confidentiality arrangements should reflect the commercial reality of the transaction rather than relying on generic template wording.
The commercial stakes are significant. The Office for National Statistics estimates that UK investment in intangible assets reached £244.7 billion in 2023, some £85.3 billion more than investment in tangible assets such as machinery and buildings.[1] Confidential information, trade secrets, proprietary processes and commercially sensitive data are increasingly recognised as strategic business assets requiring appropriate legal protection.[2]
Mutual vs One-Way NDAs: Understanding the Difference
A one-way (unilateral) NDA is used where only one party intends to disclose confidential information. It is commonly appropriate for:
* employer and contractor relationships;
* supplier discussions;
* commercial proposals;
* consultancy engagements;
* disclosures of intellectual property.
A mutual NDA, by contrast, assumes that both parties will disclose confidential information during negotiations. These NDA documents, agreements are frequently used for:
* joint ventures;
* strategic partnerships;
* cross-border collaborations;
* investment discussions;
* technology licensing arrangements;
* merger and acquisition negotiations.
The distinction is commercially important. Using a unilateral NDA where both parties are in fact sharing confidential information creates an imbalance in obligations and can delay negotiations.
Why the Right NDA Structure Matters
An NDA should not simply prohibit disclosure. It should define what information is protected, who may access it and how long the confidentiality obligations continue. This matters because the equitable duty of confidence that arises independently of contract is comparatively narrow: the information must have the necessary quality of confidence, it must have been imparted in circumstances importing an obligation of confidence, and there must be an unauthorised use of it to the detriment of the disclosing party.[3] A well-drafted agreement places the position on a clearer contractual footing.
Poorly drafted NDAs commonly fail to address:
* ownership of intellectual property;
* permitted disclosures;
* duration of confidentiality obligations;
* data protection considerations;
* dispute resolution provisions;
* cross-border enforcement requirements.
For growing businesses, confidentiality arrangements frequently form part of wider governance and investment-readiness considerations. Investors and commercial partners increasingly expect legal documentation to demonstrate sound commercial practice rather than generic template drafting.
Market Practice and Legal Considerations
Under English law, confidentiality obligations are generally enforceable where they are reasonable, sufficiently certain and supported by consideration. Overly broad provisions may prove difficult to enforce in practice. The courts have distinguished between genuinely confidential information and an employee's general skill and knowledge, the latter of which cannot be restrained after employment ends in the absence of an express and reasonable covenant.[4]
Contractual protection also sits alongside statutory protection. The Trade Secrets (Enforcement, etc) Regulations 2018 supplement the common law, defining a trade secret and providing measures, procedures and remedies in respect of the unlawful acquisition, use or disclosure of one.[5] Where confidentiality obligations are breached, damages are ordinarily assessed by reference to the reasonable price that would have been payable for release from the obligation; an account of the defendant's profits remains an exceptional remedy.[6]
Businesses operating internationally should also consider:
* UK GDPR obligations, including the mandatory contractual terms required where personal data is processed by another party on their behalf;[7]
* trade secret protection;
* intellectual property ownership clauses;
* jurisdiction and governing law provisions;
* confidentiality obligations owed by employees and contractors.
It is worth noting that an NDA is not a substitute for a data processing agreement. Where personal data will be shared, the two documents perform different functions and are usually both required.
The UK's legal framework provides robust contractual protection, but that protection depends on careful drafting and commercial relevance.
What to Consider
Before selecting an NDA template, consider the following questions:
* Will one or both parties disclose confidential information?
* Does the agreement adequately protect intellectual property?
* Are the confidentiality obligations time-limited and commercially reasonable?
* Does the document address international business relationships?
* Will the NDA support a future investment or due diligence exercise?
* Have data protection obligations been considered?
* Are the governing law and dispute resolution provisions appropriate?
Businesses should also review whether confidentiality obligations extend to advisers, consultants and third-party service providers.
Practical Takeaway
An NDA should be viewed as more than an administrative document. In many commercial transactions it is the first legal agreement exchanged between prospective business partners, and it often sets expectations around governance, professionalism and risk management.
Choosing between a mutual and a one-way NDA is not merely a drafting preference; it is a commercial decision that should reflect how confidential information will be shared, protected and ultimately used. Businesses that invest time in selecting the appropriate confidentiality framework are typically better placed to protect valuable information, facilitate smoother negotiations and strengthen commercial relationships from the outset.
This article is intended as general information on English law and does not constitute legal advice. Specific advice should be taken on any particular transaction.
[1]Office for National Statistics, 'Investment in Intangible Assets in the UK: 2023' (ONS, 2 December 2025) https://www.ons.gov.uk/economy/economicoutputandproductivity/productivitymeasures/bulletins/investmentinintangibleassetsintheuk/2023> accessed 7 August 2026.
[2]Intellectual Property Office, 'Valuing Your Intellectual Property' (GOV.UK) <https://www.gov.uk/guidance/valuing-your-intellectual-property> accessed 7 August 2026.
[3]Coco v A N Clark (Engineers) Ltd [1969] RPC 41 (Ch) 47 (Megarry J).
[4]Faccenda Chicken Ltd v Fowler [1987] Ch 117 (CA).
[5]Trade Secrets (Enforcement, etc) Regulations 2018, SI 2018/597, reg 2.
[6]Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch).
[7]UK GDPR, art 28; Information Commissioner's Office, 'Contracts and Liabilities between Controllers and Processors' <https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/accountability-and-governance/contracts-and-liabilities-between-controllers-and-processors-multi/> accessed 7 August 2026.
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