NDAs in seven minutes: mutual, one-way, when to skip (UK edition)

Non-disclosure agreements are the document most founders sign without reading. That works until you sign one that locks you out of building a similar product, or one that survives forever, or one that contains a non-compete dressed as confidentiality. The fix is to keep two templates ready, know which fits, and refuse the rest.

England has no NDA statute, which surprises Americans. Confidentiality is protected by three overlapping doctrines: the common-law equitable duty of confidence (Coco v A N Clark (1969) RPC 41 is the foundation case, asking whether the information has the necessary quality of confidence, was imparted in circumstances importing an obligation, and was used without authorisation to the discloser's detriment), the tort of misuse of private information (developed from Campbell v MGN [2004] UKHL 22), and the implied duty of fidelity owed by employees during employment. That common-law floor is real, which is why most pre-pitch NDAs are theatre.

Mutual or one-way

Use a mutual NDA when both sides share sensitive information: partnership talks, integration discussions, technical deep-dives, M&A. Use a one-way NDA only when one party clearly discloses and the other receives, typically external consultants, contractors, or interviewees seeing production data. A mutual NDA is also useful with prospective hires when they will see internal benchmarks or roadmap during the process.

Term and survival

Three years from disclosure is the modern default for commercial information. Five years is acceptable for source code, model weights or pre-launch product specs. Avoid perpetual confidentiality except for narrowly defined trade secrets (which already get protection under the Trade Secrets (Enforcement, etc.) Regulations 2018, SI 2018/597, implementing the EU Trade Secrets Directive into UK law before Brexit and retained since). English courts apply the restraint-of-trade doctrine to open-ended personal restraints, so perpetual confidentiality on broadly defined information is at risk of being read down.

Do I really need a solicitor to send a first NDA?

No. For a standard mutual or one-way NDA, take a UK template, fill in the parties, the purpose, the term and the governing law, and send it. Budget zero in legal fees for the first hundred NDAs. Get counsel involved only when the counterparty sends a custom paper longer than four pages, or when the NDA precedes a large commercial deal (M&A, multi-year integration, enterprise sales over 1 million pounds in expected value).

Clauses to push back on

• Non-solicit of employees in an NDA: usually overreach. Put it in a separate signed clause with a defined scope (typically 12 months, defined roles).
• Non-compete dressed as confidentiality: refuse. After Tillman v Egon Zehnder Ltd [2019] UKSC 32 the courts will still consider severance (blue-pencilling) of unenforceable wording, but the test is strict: each restraint must protect a legitimate business interest and be no wider than necessary. A confidentiality clause that prohibits working in 'the industry' fails on both limbs.
• Choice of law in an exotic jurisdiction: insist on English law and the exclusive jurisdiction of the English courts for any contract under 1 million pounds in expected value.
• Injunctive-relief language pointing at foreign courts: at most agree to interim relief under English procedure (CPR Part 25) at the seat of either party.
• Liquidated damages above 50,000 pounds: English courts strike down genuine penalty clauses after Cavendish Square v Makdessi [2015] UKSC 67, but the test (whether the clause is a secondary obligation imposing detriment out of proportion to a legitimate interest) is litigated case by case. You do not want to be the one arguing your number is proportionate.

What good carve-outs look like

Standard carve-outs let you use information already public, already in your possession, or developed independently without reference to the other side. Add a residuals clause for general know-how stored in unaided memory, which protects engineers from being unable to use what they learned on the job. Without residuals, every conversation becomes a potential breach-of-confidence claim three years later. UK commercial counterparties routinely accept residuals; US counterparties routinely refuse. If you face a US-style refusal, push back hard, the clause is the difference between a usable NDA and a knowledge prison.

Should I sign an NDA from an investor before the first pitch?

No. Top UK seed funds (Octopus, LocalGlobe, Seedcamp, Hoxton, Index Seeds) and almost every credible international fund will not sign at the first meeting; asking signals inexperience. The reverse, an investor asking you to sign their NDA at first pitch, is also a flag: the conversation likely is not with a real investor. Save the paperwork for the data-room phase, where a one-way NDA from your side to their advisers is normal and short.

If the other side breaches, what does enforcement actually cost?

An English commercial-court action for NDA breach starts at 30,000 to 60,000 pounds in solicitor fees plus court fees scaling with the claim value, and a typical resolution takes 12 to 24 months in the Business and Property Courts. Damages are limited to provable loss (or an account of profits in equitable claims), which for confidentiality breaches is famously hard. The springboard doctrine (Terrapin v Builders' Supply [1967] RPC 375) lets the court order a head-start injunction even after the information becomes public, but the real value of the NDA is usually the chilling effect before breach plus an interim injunction under CPR Part 25 to stop the spread. Once the spread has happened, the lawsuit rarely makes you whole.

When to skip the NDA entirely

Most investor first meetings do not need an NDA. Sending one before a pitch signals inexperience, and serious investors will not sign anyway. Save the paperwork for the second meeting and the data room. Skip NDAs at industry events, on intro calls, and in any conversation where you control what you say. Information you choose not to share does not need a contract to stay confidential.

Use the document only when the conversation cannot move forward without one. That is a much smaller set than your inbox suggests.