Six tips to make the confidentiality agreement enforceable

You make a non-disclosure agreement (NDA) enforceable by clearly defining six things: a concrete objective, a clear definition of what is confidential, practical usage agreements, a check on the counterparty's terms and conditions, a sound penalty clause, and proper legal wording. After all, a signature alone offers little security: only when those six points are correct can you truly address a leak. Below, we explain how to do this point by point and what mistakes entrepreneurs often make.

In short, you make an NDA enforceable by:

• a concrete description for which the information may and may not be used;
• a clear definition of what information is secret;
• practical usage agreements (prohibition of copying, return, need-to-know);
• a check on the counterparty's general terms and conditions;
• an effective penalty clause subject to additional damages;
• Proper legal drafting and a clear duration.

What is a confidentiality agreement and when do you need one?

A confidentiality statement, confidentiality agreement, or Non-Disclosure Agreement (NDA) always has the same purpose: to keep certain information confidential. Think of a new product that has not yet been launched, customer databases, pricing agreements, source code, or business processes. As soon as you share confidential information with a potential partner, supplier, investor, freelancer, or employee, an NDA is appropriate.

An NDA can be unilateral (one party shares information) or reciprocal (both parties share). In practice, such a statement is often sufficient to keep the other party silent. But “often” is not “always”: if things go wrong, only what is in writing counts. That is why you make the statement as enforceable as possible.

Tip 1: Write down a concrete goal description

First and foremost, make clear why certain information must remain confidential. A clear objective description defines what the information may and may not be used for. For example: the shared knowledge may only be used to evaluate the collaboration, not to build a competing product yourself.

Be clear, but not so narrow that normal use becomes impossible. A good purpose description ensures that you can easily verify any potential infringement: if the counterparty used the information outside the agreed purpose, the violation is quickly proven.

Tip 2: Define which information is secret

Explicitly indicate which information is subject to confidentiality to avoid any disputes afterwards. Be specific and include all forms of information: technical data, samples, drawings and sketches, financial figures, verbal communications, and digital files.

• Name categories instead of separate documents, so that the protection does not become too narrow.
• Indicate that the list is not exhaustive (“including, but not limited to”), so that a forgotten category is not automatically excluded.
• Exclude what is already public or what the recipient already lawfully knew; this prevents your clause from becoming unreasonably broad and thereby actually vulnerable.

Tip 3: Make practical usage agreements

The less confidential information the counterparty actually obtains, the smaller the risk. Therefore, make concrete agreements regarding the use of the information. For example, you can:

• prohibit the copying of documents or leaving the premises;
• stipulate that information is returned or destroyed after completion;
• Restrict who within the organization gets access (need-to-know).

Does the counterparty engage its own employees or subcontractors? Then require it to also agree to confidentiality with those individuals and to provide proof thereof. Optionally, you can conclude a confidentiality agreement directly with those third parties.

Tip 4: Have the counterparty's terms screened

A common mistake: you focus solely on your own NDA and forget the counterparty's terms and conditions. These may state, for example, that they are not liable for breaches by their subcontractors, or that their liability is severely limited. If anything leaks out anyway, you are left empty-handed.

Therefore, do not focus solely on your own document, but also have the general terms and conditions legally reviewed. You do not have to simply accept those terms in their entirety; it is often possible to negotiate which clauses do and do not apply to confidentiality.

Tip 5: Include a good penalty clause

The tricky thing about a breached NDA is that the actual damages are often difficult to prove. A penalty clause solves this: in the event of a breach, the counterparty owes a pre-agreed amount, without you having to demonstrate your actual damages. That makes the clause your most important leverage tool.

Pay attention to a number of points:

• Keep the amount proportionate to the value of the information. An excessively high fine may be reduced by the judge.
• The judge may reduce a penalty if awarding the full amount would lead to an unreasonable result. The judge exercises restraint in this regard and, as a rule, only reduces the penalty if fairness clearly demands it. Nevertheless, you cannot validly contract away this power to reduce the penalty in the contract, so do not blindly assume that the full penalty will always be awarded.
• Preserve the right to additional compensation. Stipulate that, in addition to the fine, you can also claim your actual (higher) damages, provided you can prove them.

An awkwardly worded penalty clause is a common reason why a fine ultimately does not stand, or only partially stands. The wording therefore requires careful attention.

Tip 6: Have your confidentiality agreement drafted by a specialist

Perhaps the most important tip. If you want to be absolutely certain that your secrets remain confidential, have the declaration drafted or reviewed by a lawyer. Not only will your own text become watertight, but interconnected agreements (such as the purpose description, the penalty clause, and the interaction with general terms and conditions) will also align. This prevents a single weak clause from undermining the entire declaration.

We draft a tailored confidentiality agreement , honestly disclosing the risks you face and how we cover them.

How long must a confidentiality agreement be valid?

An NDA stands or falls with a clear duration. Specify from when the confidentiality applies, how long it lasts, and whether it continues after the collaboration has ended. For truly sensitive business information, you often opt for confidentiality that continues for several years after the termination, or even as long as the information remains confidential.

Without a time limit, discussion quickly arises regarding whether the obligation still applies. Furthermore, an obligation that would apply “forever” without any limitation may actually be viewed as unreasonable in a dispute. Therefore, align the term with the value and durability of the information you are protecting.

What do you do if confidentiality is breached?

Do you suspect that the opposing party has leaked or misused confidential information? Acting quickly and carefully increases your chances of limiting the damage and invoking the penalty clause. A practical sequence:

1. Capture evidence. Save emails, messages, screenshots, and witness statements. In an NDA dispute, much revolves around the question of who knew and shared what, when.
2. Retrieve the declaration. Check exactly what information is subject to confidentiality, whether the term is still valid, and what the penalty clause stipulates.
3. Put the other party in default. A formal notice of default in which you specify the violation and demand the fine (and any additional damages) is often enough to make someone stop.
4. Seek legal assistance in a timely manner. The sooner a lawyer reviews your case, the better you safeguard your position and evidence. See what our legal assistance can do for you.

Keep in mind that proving a leak can be difficult. That is precisely why a clear definition of “confidential information” and a good penalty clause are so important: they reduce the burden of proof when things go wrong.

Common mistakes with an NDA

• Describe what is secret too vaguely. Without a clear definition, every discussion becomes a he-said-she-said argument.
• No duration or an unrealistic duration. Determine how long the confidentiality applies and whether it continues after the collaboration ends.
• A fine without reservation for additional damages. You could then be stuck with an amount that is too low.
• No agreements regarding third parties. The counterparty is leaking via a subcontractor and you cannot hold them accountable.
• Blindly adopting a standard model. An online template rarely takes your specific situation into account.

Frequently asked questions about the confidentiality agreement

Is a confidentiality agreement legally binding in the Netherlands?

Yes. A confidentiality agreement is a standard contract and is therefore, in principle, binding and enforceable. Whether you can successfully address a breach depends primarily on how clearly the agreements are formulated, including regarding what is confidential and what the consequences of a breach are.

What is the difference between a confidentiality statement, a confidentiality agreement, and an NDA?

In terms of content, there is hardly any difference; it concerns the same agreement under a different name. “NDA” stands for Non-Disclosure Agreement. A unilateral version protects the information of one party, while a mutual one protects that of both parties.

How high can the fine in an NDA be?

There is no fixed maximum, but the amount must be proportionate to the value of the information and the importance of confidentiality. An excessive fine runs the risk of being reduced by the court. Therefore, have the amount tailored to your specific situation.

Can the judge reduce an agreed fine?

Yes, the judge has the power to reduce a contractual penalty if awarding the full amount would lead to an unreasonable result. The judge exercises restraint in doing so, but you cannot legally exclude this power of reduction in the contract. Therefore, do not count on the full penalty always being awarded one-to-one.

How long does a confidentiality agreement remain valid?

You determine this yourself in the declaration. Often, the confidentiality obligation continues for a number of years after the collaboration has ended. Establish a specific duration to avoid any ambiguity regarding when the obligation ends.

Do I need an NDA or a non-compete clause?

These are different instruments. An NDA prohibits the sharing and misuse of confidential information; a non-compete or non-solicitation clause additionally restricts what someone may do professionally, for example after employment. With employees and freelancers, these agreements are often combined. Have the specific protection you need assessed on a case-by-case basis.

Do you want to have your confidentiality agreement drafted or reviewed?

Do you want to be certain that your secrets stay within the confines of your home? Our legal experts draft an enforceable confidentiality agreement or review your existing document. View our options for drafting a confidentiality agreement, read more about our contract law , or schedule an intake directly. We honestly disclose the risks you face and what we do to protect you.

P.S.: Don't worry, we're silent as the grave.