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When is it Appropriate for a Business to Use an NDA?


Mark Tromans by Mark Tromans DATE 08/10/26

Every business has confidential information that it would rather not be exposed to the public. Whether that’s valuable client lists, unique product concepts, secret recipes, or sensitive financial data, keeping it under wraps can be key to your business’s ongoing success.

However, there are times when you may find it necessary to share this information with other parties. Whether that’s a supplier, an employee, an investor, or a potential new partner – it’s important to put the right legal measures in place to protect your business.

That’s where non-disclosure agreements (NDAs) can be useful. NDAs are a valuable business tool used to protect confidential information.

In this article, we’ll explain what a business NDA is, when to use an NDA, and the scenarios in which it may not be appropriate to do so.

 

What is a non-disclosure agreement (NDA)?

A non-disclosure agreement (sometimes also called a confidentiality agreement) is a written agreement used by businesses to prevent other parties from sharing confidential information.

When a party signs an NDA, it becomes legally binding and they could face a claim for breach of contract if they break the terms of the agreement.

If a business needs to share confidential information with a potential partner, advisor or employee, it may first ask them to sign a commercial NDA so that they can do so with confidence.

NDAs can either be one-way or mutual. A one-way NDA should be used when only one party is disclosing information, while a mutual one is used if both are.

 

When should a business use an NDA?

There are various scenarios in which a business should consider using a commercial NDA, including:

  • Pitching ideas to investors or potential business partners.
  • Working with contractors, freelancers, or consultants.
  • Giving employees access to sensitive data.
  • During a merger, acquisition, or joint venture.
  • Licensing or selling intellectual property.
  • As part of a settlement agreement when an employee leaves a business.

Examples of confidential information that NDAs may be used to protect include business plans or strategies, product concepts, intellectual property, client lists and financial or operational data.

 

When shouldn’t you use an NDA?

While NDAs are very useful, there are certain times when it is not appropriate for businesses to use them. Using an NDA inappropriately could cause more harm than good, particularly if used unlawfully – so it’s important to understand when an NDA is, and isn’t, the right tool for the job.

Here are three scenarios when a business NDA may not be the right choice.

To silence whistleblowers or cover misconduct

NDAs should never be used to silence someone and stop them from reporting something unlawful. An NDA is void if used to cover up wrongdoing like harassment, discrimination or other criminal behaviour.

For casual conversations

Using NDAs for casual or introductory conversations is impractical and unnecessary. It could even damage relationships by making you appear over the top or untrusting.

If information is already public

There is no need to use an NDA if the information you’re sharing is already available to the public. Doing so only wastes time and energy by adding an unnecessary layer of complexity.

 

Speak to Hibberts Solicitors for help drafting an NDA

A legally binding NDA should clearly define what information is protected, who it can be shared with, how it may be used, when the agreement ends and the consequences if it is breached. If your NDA is poorly worded or fails to cover these key points, it may not provide the level of protection you expect and could be difficult to enforce.

At Hibberts Solicitors, our team of commercial solicitors has been helping businesses throughout Cheshire and Shropshire to protect their confidential information since 1799. Whether you need a bespoke non-disclosure agreement drafted, an existing NDA reviewed or advice about whether an NDA is appropriate for your circumstances, we’re here to provide practical, straightforward legal advice tailored to your business.

To speak to one of our specialist commercial law solicitors, contact us today by calling 01270 624 225 or emailing enquiries@hibberts.com.

Mark Tromans

Mark Tromans

Head of Corporate and Commercial

Mark qualified as a Corporate and Commercial Solicitor in 2016, after working at the Solicitors Regulation Authority and spending around two years as a paralegal in Personal Injury before commencing a training contract. Mark wanted to be a Solicitor ever since he can remember, but it wasn’t until Mark began studying for his law degree at his local university in Wolverhampton that he realised he wanted to specialise in Corporate and Commercial law. After completing his law degree, achieving a 2:1 with honours, Mark continued his studies at the University of Wolverhampton and completed a post-graduate Legal Practice Course, achieving a Distinction.Mark is originally from Brierly Hill in the West Midlands, but after meeting his wife at the firm where he was training, Mark moved to Shropshire. In the years before joining Hibberts, Mark worked for two well-known corporate law firms in the West Midlands and Shropshire, where he developed his skills and expertise in both corporate transactional work and commercial contract work.