Confidentiality Agreement vs. Non-Disclosure Agreement?

Last updated: 6 July 2021

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 are essentially the same thing. 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 a higher degree of secrecy is required. Non-disclosure implies you must not disclose personal or private information. But keeping confidential implies you be more proactive in making sure information is kept secret. This could include putting restrictions on the use of confidential information, protection of electronic databases, preventing theft by employees, 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 and the type of 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). But if there is a two-way (or multi-lateral) exchange of secret or commercially sensitive information, the agreement is more likely to be titled 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 there being subtle differences in when the two terms (Confidentiality Agreement Vs Non-Disclosure Agreement) are used, in practice there is no difference between these two agreements and the terms are interchangeable. Ultimately, whether you choose to use a Confidentiality Agreement or a Non-Disclosure Agreement, you will have the same protection.

We’ve written an extremely easy-to-use Confidentiality Agreement template. It uses plain English with no legal jargon and comes in 3 formats: email, letter and full agreement.

About 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 more than 20 years experience in corporate, banking and trust law. Follow this link to read the full bio of Vanessa Emilio.