Non-Disclosure Agreement vs Confidentiality Agreement

Last updated: 5 September 2024

What is the difference between a Confidentiality Agreement and a Non-Disclosure Agreement?

A Confidentiality Agreement (or Confidential Disclosure Agreement, CDA) and a Non-Disclosure Agreement (or NDA) are essentially the same. Both are trying to protect private or confidential information from becoming public or more widely known. The terms (and the agreements) are interchangeable, but in practice, they are used in slightly different circumstances. For example:

1. Confidentiality Agreement is used when more secrecy is required. Non-disclosure implies you must not disclose personal or private information. However, keeping confidential implies you should be more proactive in making sure information is kept secret. This could include restricting the use of confidential information, protecting electronic databases, preventing employee theft, requiring sub-contractors to be bound by the same agreement, etc.

2. Confidentiality Agreement is more frequently used in employment or personal situations. Here the information could be commercially sensitive that you come across during employment or information that is potentially personally damaging – for example, keeping details of a dispute (or even the fact that there was a dispute) from becoming public knowledge.

3. Non-Disclosure Agreement is more frequently used in third-party or startup situations. These third parties could be vendors, suppliers, customers or potential investors. The information that needs to be kept secret could be a trade secret, patent, invention, intellectual property, pricing arrangement, financial information, etc.

4. Non-Disclosure Agreement is used when the obligation is one-way (or unilateral). However, if there is a two-way (or multi-lateral) exchange of secret or commercially sensitive information, the agreement is more likely to be titled a Confidentiality Agreement.

5. Non-Disclosure Agreement is more commonly used in the US. And by contrast, the term Confidentiality Agreement is more commonly used in Australia, New Zealand, England and Canada.

Despite subtle differences in when the terms (Confidentiality Agreement Vs NDA or Non-Disclosure Agreement) are used, in practice, there is no difference between these two agreements, and the terms are interchangeable. Ultimately, you will have the same protection whether you choose to use a Confidentiality Agreement or a Nondisclosure Agreement.

About the Author: Vanessa Emilio

Vanessa Emilio (BA Hons, LLB, ACIS, AGIA) is the Founder and CEO of Legal123.com.au and Practice Director of Legal123 Pty Ltd. Vanessa is a qualified Australian lawyer with 20+ years experience in corporate, banking and trust law. Click for full bio of Vanessa Emilio or follow on LinkedIn.

Disclaimer: We hope you found this article helpful, but please be aware that any information, comments or recommendations are general in nature, do not constitute legal advice and may not be suitable for your specific circumstances. Whilst we try our best to ensure that the information is accurate, sometimes there may be errors or new information that has yet to be included. Any decisions you take based on information on this website are made at your own risk and we cannot be held liable for any losses you suffer. Contact us directly before relying on any of this information.