Contractor Unilateral Non-Disclosure Agreement (NDA) Template

Your company’s independent contractors may need confidential or proprietary information to perform their job duties. Using non-disclosure agreements when hiring contractors can help your company prevent unwanted disclosures.

What a Contractor Unilateral NDA Is

Contractors provide labor, knowledge, and services that a business can’t get from its employees. You may not always need or want to hire an employee with the contractor’s particular skills. In this situation, using a contractor can preserve your operational flexibility.

Contractors may access the following company information while performing their job duties:

• Financial data
• Software source code
• Product designs
• Customer or supplier information
• Marketing plans
• Manufacturing methods and processes
• Inventions

A unilateral NDA binds one party to keep another party’s information secret. When implemented with contractors, the contractor is restricted from disclosing specified information about the employer. The NDA is typically part of the contractor agreement, though it could also be a separate contract.

Why Independent Contractors Sign NDAs

Independent contractors usually sign NDAs because these agreements are fairly standard, and they allow employers to hire independent contractors confidently. Moreover, as long as they’re reasonable in duration and scope, they shouldn’t interfere with a contractor’s business.

Essential Clauses to Include

An effective NDA contains the following clauses:

• The parties’ names
• A description of the confidential information
• Permitted uses of the confidential information
• A non-disclosure clause
• The duration of the agreement

Additional clauses are optional. For example, an NDA may include a liquidated damages clause since the harm from disclosing information may be difficult to quantify.

How to Write the Agreement

Writing an NDA may start with a negotiation. Conversely, some companies might use a uniform employee NDA template for all workers, including contractors.

The company should identify the information the contractor will need and, of that information, what is confidential or proprietary. It should also determine and define the contractor’s job duties. Based on these considerations, the company can draft the NDA.

Tips for a Stronger NDA

An effective NDA uses clear language. Overly broad or ambiguous language can allow contractors to argue that the NDA is unenforceable due to vagueness.

Strong NDAs also avoid incorporating illegal terms. The federal Speak Out Act prohibits pre-dispute NDAs that block disclosures of sexual assault or harassment. Additionally, the federal Defend Trade Secrets Act forbids NDAs that prevent the reporting of legal violations.

However, both pieces of legislation permit NDAs that protect legitimate trade secrets. Therefore, a strong NDA will concentrate on the company’s trade secrets and other proprietary information and avoid disclosures to authorities.

Finally, a strong NDA has a reasonable term. Narrowly focused NDAs can have longer terms, including perpetual in some cases. In contrast, broad NDAs typically must have shorter terms, although different states balance these factors differently.

Find the Right NDA with ConsumerShield

A contractor NDA must be drafted carefully to protect a company’s valuable information while complying with the law. Explore ConsumerShield’s full library of non-disclosure agreement templates to find the right contract for your business.