Most legal documents are clear and obvious, where there's really no question when they need to be used and how they should be filled in. The non-disclosure agreement is an oddball in that sense, because while the agreement itself is typically quite clear, when it should be used can be quite unclear. In a nutshell, NDAs are all about ensuring the confidentiality of any information shared.

Here's a scenario: you've just heard from an investor who would like more information about your company before writing that glorious check. Do you ask her to sign an NDA? Or another scenario: you're talking with another company about merging. Their CTO is super-smart and famous for liberating ideas from others. Do you ask him to sign an NDA before revealing anything about your technology?

The answers are dependent upon your own approach to business, but our counsel is to unquestionably insist on a mutual NDA in the latter situation, and to skip the NDA in the former. In fact, almost all savvy investors refuse to sign NDAs because hearing about ideas is their business, and it'd be impossible to keep track of all the non-disclosures they'd encounter in a typical year. Further, remember that, to an investor, it's the implementation that counts, not the idea.

Non-disclosure agreements are fundamentally quite simple documents, which is good. Most of them can boil down to "don't tell anyone about my secrets and I won't tell anyone about yours", then go on to detail what's meant by secrets, what's mean by telling, etc etc.

Read a typical NDA

All in all, it's very helpful to have an NDA available when you need one for strategic meetings, executive interviews, and other situations, but don't be overly paranoid about sharing your ideas; after all, the ability to turn an idea into a successful business is the real challenge. Oh! And if you do have an NDA, make sure it specifies confidential material either written or oral; most don't include coverage for orally transmitted information.

Next up: terms of service agreements.

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