Mutual Vs. Unilateral NDA: Definitions And Uses (2026)
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Reviewed By Adam Ramirez, J.D.
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Summary
- A non-disclosure agreement obligates one or both parties to confidentiality
- Unilateral and mutual NDAs are two common types
- Specific situations dictate whether to use a mutual vs. unilateral NDA
A wide range of industries use non-disclosure agreements (NDAs), including inventors, software developers and technology companies. But what is an NDA exactly? NDAs are legal documents that protect valuable, confidential or sensitive information. They can also be used in settlement agreements by parties to a dispute.
There are different types of NDAs. Here’s how to know whether a mutual vs. unilateral NDA is appropriate for your situation.
What Is a Unilateral (One-Way) NDA?
A unilateral NDA only obligates one party to maintain confidentiality. For example, an employer might require employees to sign unilateral NDAs during onboarding. In this example, the worker must keep their employer’s plans, formulas and processes secret. However, the employer has no such obligation to keep the worker’s secrets.
Another example of a unilateral NDA occurs in a settlement agreement. The easiest way to understand this use of unilateral NDAs is through an example.
Suppose that a hotel guest slips down the stairs in a hotel. The victim files a slip and fall lawsuit against the hotel owner, and the hotel’s insurer agrees to pay $100,000 for the victim to dismiss the lawsuit. The settlement agreement might also include a unilateral NDA where the victim agrees not to tell anyone how much they received or what they learned about the hotel during the lawsuit.
What Is a Mutual (Two-Way) NDA?
A mutual NDA obligates both parties to maintain confidentiality. For instance, two businesses exploring a joint venture might use a mutual NDA. Both parties plan to disclose confidential sales data and business products, so each agrees not to disclose the other’s information.
Key Differences Between One-Way and Two-Way NDAs
Generally, the only difference in a mutual vs. unilateral NDA is how many parties agree to confidentiality. In a unilateral NDA, one party promises the other not to disclose the protected information. In a mutual NDA, the parties promise each other not to disclose the protected information.
How to Choose the Right NDA for Your Situation
You will choose the type of NDA based on which parties have information that must be protected. If only one party has protected information, you need a unilateral NDA. You need a mutual NDA if multiple parties have protected information.
Keep in mind that, depending on your state, not all information can be protected by an NDA. For example, a California non-disclosure agreement cannot prevent workers from talking about discrimination, harassment or illegal acts in the workplace.
Learn More About NDAs and Other Legal Documents
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What Is An NDA? Knowledge Base
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Frequently Asked Questions
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You will look for the confidentiality provisions of the contract. If both parties are restricted from disclosing information, you have a mutual NDA. If only one party’s disclosures are restricted, you have a unilateral NDA.
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They are valid if a party offers something in exchange for the other’s promise not to disclose their information. For example, an employer offering employment for a worker’s promise not to disclose the company’s proprietary information would be valid.
