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An NDA (Non-Disclosure Agreement) or confidentiality agreement is a contract in which parties agree to keep confidential information secret. This can be mutual (obligatory for both parties) or unilateral (one party receives the information). For SMEs, it is indispensable during investor negotiations, supplier due diligence, collaboration with freelancers, or acquisition discussions. In the event of a violation: a contractual penalty plus damages. A standard good NDA costs €250-€750 from a lawyer. Below are the content, pitfalls, and how Petra provides her SME clients with a strong NDA.
The short answer
- What: Contract for the confidentiality of confidential information.
- Forms: mutual (NDA) or unilateral (non-disclosure agreement).
- When: investors, DD suppliers, freelancers, acquisition discussions.
- Duration: typically 2-5 years after the end of the collaboration.
- Fine: contractually often €25,000-€100,000 per violation.
When is an NDA required?
Typical situations:
- Investor pitches: before you present your business case.
- Supplier negotiation: regarding sharing price list, technical specifications.
- Customer collaboration: regarding access to customer business processes.
- Freelancers: regarding access to code, customer data, strategy.
- Acquisition discussions: for data room access.
- Joint ventures: for strategic plans.
- Employees: often built into the employment contract.
What is in it?
- Parties: who provides, who receives.
- Definition of confidential information: technical (specs, code), commercial (customers, prices), strategic (plans).
- Exceptions: already publicly known, previously known, provided by a third party, independently developed.
- Permitted use: for what purpose may info be used.
- Limited distribution: who is allowed to see information internally (need-to-know).
- Duration of confidentiality: 2-5 years typically, after collaboration.
- Return/destruction: of physical and digital copies.
- Penalty for violation: contractually fixed amount plus compensation for damages.
- Applicable law: Dutch law.
- Competent court: sub-district court/specific district.
Mutual vs. unilateral
- Mutual (NDA): both parties provide/receive information. Standard for collaborations and partnerships.
- Unilateral (non-disclosure agreement): one party provides, the other receives. For investors, freelancers, suppliers.
Mutually often better — demonstrates an equal position, simplifies negotiation. Unilaterally necessary in case of an unequal power dynamic.
Fine amount
Contractual penalty for breach — not unlimited:
- Realistic amount (e.g. €25,000-€100,000 per violation).
- Plus actual compensation in addition to the fine.
- The judge may reduce untenable fines (Article 6:94 of the Dutch Civil Code).
Fine too low: insufficient deterrence. Too high: judge reduces to a reasonable level.
Pitfalls
- Definition too broad: “all information” — judge can limit it.
- No time limit: Indefinite NDA often untenable.
- Vague fine: difficult to enforce without a concrete amount.
- No exceptions: reasonable exceptions (publicly known) must be included.
- Unilateral formulation: in case of reciprocal cooperation → unattractive.
Petra's NDA Practice
Petra (SME contracts lawyer) drafts NDAs for various situations:
- Standard investor NDA: 3 years, fine €50,000.
- Freelance NDA: 2 years, fine €25,000, targeting customer data.
- M&A data room NDA: 5 years, fine €100,000, confidentiality agreement.
- Joint venture NDA: mutual, 5 years, partnership-specific.
Costs: €250-€750 per template. Adaptation to specific situation €500-€1,500.
Proof of confidentiality
In case of suspected violation:
- Documentation of information provision.
- Timestamp on shared documents.
- Access audit logs.
- Comparison of original and stolen material.
A good NDA prevents violation; good documentation makes the violation demonstrable.
Honest recommendation
For SMEs: NDAs are a daily tool. Make a one-time investment in good templates (€500-€1,500 with a lawyer) — then use them for years. Adapt them to each situation (duration, penalty, scope). For strategic cases (M&A, IP licenses): consult a lawyer for customization. For regular business cooperation: a standardized NDA with a few adjustments is sufficient. When in doubt: document warning signs and consult a lawyer.
For other topics: confidentiality agreement, non-compete clause and copyright protection.
Frequently Asked Questions
Non-Disclosure Agreement — a contract in which parties agree to keep confidential information secret. Mutual (both parties) or unilateral (one party receives information). Standard in business negotiations.
Parties, definition of confidential information, exceptions, permitted use, limited distribution (need-to-know), duration of confidentiality, return/destruction, penalty for violation, applicable law and competent court.
Typically 2-5 years after the end of the collaboration. For strategic information (M&A, IP): 5+ years. Indefinite term often untenable — courts limit it. Ensure a concrete end date.
€25,000–€100,000 per violation is common for SMEs. Plus actual compensation for damages in addition to the fine. The judge can reduce unsustainable fines — a realistic amount is essential.
Standard template from a legal expert: €250-€750. Customization for complex situations: €500-€1,500. For M&A or international aspects: €1,500-€5,000. One-time investment, years of use.
Definition too broad (“all information”), no time limit, vague penalty wording, no exceptions (publicly known), unilateral in case of reciprocal cooperation. Judge can limit untenable NDAs.
Demand letter via a legal expert, summary proceedings for an immediate injunction, substantive case for damages. Important: proof of provision of information and demonstrable violation. Good documentation makes enforcement possible.
