What Should a Nondisclosure Agreement Include? A Guide for North Carolina Businesses

By Benny U. Enemchukwu

Short Answer

A nondisclosure agreement, or NDA, is a contract in which one or both parties agree to keep certain information confidential and use it only for a stated purpose. A useful NDA defines what is confidential, limits how it may be used, lists standard exclusions, sets a duration, and covers return of information and remedies. In North Carolina, NDAs work alongside the Trade Secrets Protection Act. That Act protects information only if you make reasonable efforts to keep it secret. A signed NDA is one of those efforts.

When a Business Uses an NDA

Common moments include:

Talking with a potential partner, investor, manufacturer, or buyer.
Bringing on a contractor or employee who will see customer lists, pricing, or methods.
Sharing a product or business plan before a deal is signed.

If only one side is sharing, a one-way NDA usually fits. If both sides will share, a mutual NDA makes sense.

How an NDA Fits With North Carolina Trade Secret Law

North Carolina's Trade Secrets Protection Act defines a trade secret as business or technical information that has commercial value from not being generally known or readily ascertainable, and that "is the subject of efforts that are reasonable under the circumstances to maintain its secrecy" (G.S. 66-152(3)). The owner of a trade secret may bring a civil action for misappropriation (G.S. 66-153). Available remedies include injunctions, actual damages, punitive damages for willful and malicious misappropriation, and attorneys' fees in some cases (G.S. 66-154).

An NDA helps in two ways. It is evidence of reasonable efforts to keep information secret. And it gives you a breach-of-contract claim if the other side breaks its promises, in addition to any trade secret claim.

The Terms That Matter Most

Definition of confidential information. Describe the categories that matter, such as pricing, customer information, product plans, source code, or methods, and say whether oral and unmarked disclosures are covered.
Purpose and use. State why the information is being shared and limit use to that purpose.
Exclusions. Standard exclusions cover information that is already public, already known to the recipient, independently developed, or received from someone with the right to share it. These track the limits in the statutory definition of misappropriation (G.S. 66-152(1)).
Who may receive it. Limit access to people with a need to know who are bound by similar duties, such as employees and professional advisers.
Duration. Set a term for ordinary confidential information, and protect trade secrets for as long as they remain trade secrets.
Return or destruction. Require return or destruction of materials when the relationship ends or on request.
Legally required disclosure. Explain what the recipient must do if served with a subpoena or court order.
Remedies. Address injunctive relief and state that the agreement does not grant a license or require either side to do a deal.
Governing law and venue. Choose North Carolina law and a convenient forum.

Employees and Contractors: The Federal Whistleblower Notice

The federal Defend Trade Secrets Act gives individuals immunity for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal (18 U.S.C. § 1833(b)(1)). An employer must give notice of this immunity in any contract with an employee that governs the use of a trade secret or other confidential information. If it does not, the employer may not recover exemplary damages or attorney fees under that federal law against an employee who did not receive notice (18 U.S.C. § 1833(b)(3)).

In practice, the agreement should include the immunity notice. An employer may instead cross-reference a policy document only if the policy document is provided to the employee and sets out the employer's reporting policy for suspected violations of law. For this rule, "employee" includes an individual working as a contractor or consultant.

What an NDA Cannot Do

Under the federal Speak Out Act, a nondisclosure or nondisparagement clause agreed to before a dispute arises is not judicially enforceable in a sexual assault or sexual harassment dispute where the conduct is alleged to violate federal, tribal, or state law (42 U.S.C. § 19403(a)). An NDA also does not override the reporting immunity described above.

An NDA Is Not a Noncompete

An NDA restricts how information is used and shared. It does not stop someone from competing with you. Noncompetition and nonsolicitation terms raise separate enforceability questions. In North Carolina, for example, an agreement limiting a person's right to do business in the state is not enforceable unless it is in writing and signed by the person who agrees to the restriction (G.S. 75-4). If you need those protections, treat them as a separate issue.

Common Mistakes

Labeling everything confidential, which makes the definition harder to enforce and harder to follow.
Leaving out the purpose, so there is no clear limit on use.
Signing the other side's form without checking the term, the exclusions, or a "residuals" clause that lets the recipient keep using what it remembers.
Signing in your own name instead of your company's name.
Using an NDA when the real need is a full services, supply, or employment agreement.

Sign It Before You Share

An NDA protects best when it is signed before the information changes hands. Keep a record of what you disclosed and when, mark written materials as confidential where practical, and make sure the person signing for the other side has authority to bind that company. Those habits also support the reasonable-efforts element of a trade secret claim under G.S. 66-152(3).

I prepare one-way and mutual NDAs written for your situation. I also review NDAs someone else has sent you. Both services are described on the contracts page. To start, request a free 15-minute call.

This article is general information, not legal advice. Reading it does not create an attorney-client relationship.

Sources

Current as of November 2026.