What is a non-disclosure agreement (NDA)?

Imagine you are about to start a collaboration with a new partner. You want to share the details of your product, your customers and your plans, but only if you are sure the information does not end up with competitors. That is exactly where a non-disclosure agreement (NDA) comes in.

An NDA is one of the most basic legal tools in business. Yet many companies either skip it or use a loose version that does not protect them. This guide explains what an NDA is, when to use it, and what actually makes it binding in Denmark.

What is an NDA?

An NDA (Non-Disclosure Agreement), in Danish also called a fortrolighedsaftale or tavshedserklæring, is a legally binding contract that obliges one or both parties to treat certain information as confidential and not pass it on to third parties.

The core of any NDA is simple: what you hear here stays here. But a professional NDA is more than an agreement to keep quiet. It defines precisely what is confidential, who is bound, for how long, and what the consequences are if it is breached.

NDA, fortrolighedsaftale and tavshedserklæring: are they the same?

In Danish business practice the terms are typically used as synonyms:

• Fortrolighedsaftale: the most neutral Danish term
• NDA (Non-Disclosure Agreement): the English term, often used in startups and international trade
• Tavshedserklæring: often used in an employment context and for an individual's obligation

Legally there is no difference of principle. What matters is the content of the agreement, not what it is called.

When do you need an NDA?

An NDA is relevant in any situation where you share information you do not want made public, and especially where there is a real risk of misuse.

Typical situations in Danish business

Negotiations on a sale or merger. Before a due-diligence process, an NDA should be signed. Financial information, customer lists and trade secrets are shared here, which in the wrong hands can harm your negotiating position or your competitiveness.

Cooperation with suppliers and partners. When you give an external party access to your systems, processes or customer data, an NDA should be signed before the collaboration begins.

Pitches and investor meetings. Many entrepreneurs hesitate to ask an investor to sign an NDA. But for concrete business plans, technology or patentable inventions, an NDA is a reasonable and professional measure. Note, however, that many experienced investors do not sign NDAs at the early stage.

Hiring key employees. Employees with access to the company's core information should as a minimum have a confidentiality clause in the employment contract. In especially sensitive cases a separate NDA is used.

Software development and IT projects. When you let an external development partner or freelancer work with your code base, customer data or technology, an NDA should be in place.

Product launches and idea testing. Before you reveal a new product, brand or business initiative to test users, agencies or focus groups, they should sign an NDA.

The two basic forms: one-way and mutual NDA

One-way NDA

Only one party discloses confidential information, and only the recipient is bound by confidentiality. Used, for example, when a startup shares its business plan with an investor, or a company shares product specifications with a manufacturer.

Mutual NDA

Both parties share confidential information, and both are bound. Used, for example, for joint-venture negotiations, technology partnerships where both contribute know-how, and long-term collaborations with mutual information sharing.

Choose the form that matches the situation. A mutual NDA is not stronger than a one-way one; it just covers both directions.

What should an NDA contain?

A solid NDA should as a minimum contain:

1. The parties

Full names, addresses and CVR numbers of all parties and the date of the agreement.

2. Definition of confidential information

The most important point in the agreement. The more precisely you define what is confidential, the easier it is to enforce. A good definition:

• Covers information in any form (written, oral, electronic)
• States what is not confidential (publicly available material, information the recipient already knows)
• Avoids trying to protect everything, as that weakens the agreement

3. The purpose of the information sharing

Confidential information may only be used for the agreed purpose, for example: "Confidential information may only be used to evaluate a potential collaboration on [description]."

4. The recipient's obligations

What may the recipient not do? Typically not:

• Pass information on to third parties
• Use information for their own competing purposes
• Copy or distribute the material beyond what is necessary

5. Duration

An NDA should have a clear duration. For business NDAs, 2 to 5 years is common. For genuine trade secrets, however, a longer or open-ended obligation can be well founded, as long as the information really remains secret.

6. Consequences of a breach

An NDA without clear sanctions is weak. State liability in damages and the option of an injunction through the courts. A contractual penalty (a predetermined amount) makes enforcement markedly easier, because you do not have to prove a specific loss.

7. Choice of law and venue

State that Danish law applies. For international agreements, arbitration can be considered.

What can weaken an NDA in Denmark?

Not all NDAs are equally robust. The most common weaknesses are:

Too broad a definition of confidential information. If you try to protect everything, the courts can limit the agreement to what is reasonable. Be specific.

No signature. An NDA is only binding once the parties have accepted it. Make sure to get it signed before you share the information.

Unreasonable terms. Terms that are unreasonable can be set aside or amended under the general clause of the Contracts Act (section 36). This applies, for example, to a duration or scope that in reality bars the other party from working in a whole industry.

Note that Danish contract law does not require consideration (as in Anglo-American law) for an NDA to be binding. An NDA is valid once the parties have entered into it, whether or not a specific payment is made.

The NDA and the Trade Secrets Act

Since 2018, Denmark has had a Trade Secrets Act that implements the EU directive. The law protects trade secrets against unlawful acquisition, use and disclosure, whether or not an NDA has been entered into.

An NDA and the law complement each other: the law gives a basic protection, while an NDA gives a more specific protection, including the option of a contractual penalty and easier proof on a breach.

Digital signature of an NDA

In Denmark, digitally signed documents are legally binding on a par with physical signatures when the signature meets the requirements of the eIDAS Regulation. A digital signature via MitID or other approved methods is both lawful and practical for NDAs.

Frequently asked questions about NDAs

Can I use an English-language NDA in Denmark?

Yes, an English-language NDA can be valid in Denmark, but for purely national agreements a Danish-language version can be more practical. Always state the choice of law (Danish law) and venue expressly.

Do I need an NDA if we already trust each other?

An NDA provides a documented basis for what was agreed, regardless of the relationship between the parties. Even in well-established relationships, an NDA creates clarity about what is confidential and reduces the risk of misunderstandings.

What does it cost to make an NDA?

The price varies. A lawyer can draw up a tailored NDA, while a thorough template covers most standard needs at a significantly lower price.

Is a confidentiality clause in an employment contract the same as an NDA?

They are similar but not identical. A confidentiality clause in an employment contract is typically shorter and forms part of the other terms of the employment. A separate NDA is more detailed and suits special situations, for example project-based work with especially sensitive data.

When should I seek legal advice on my NDA?

Seek legal advice if the agreement covers international parties, if the value of the information is extraordinarily high (patentable technology or strategically important trade secrets), or if there is a concrete risk of litigation. For an ordinary business NDA, a thorough template is often sufficient.

Can an NDA stop an employee from changing jobs?

No. An NDA limits what an employee may disclose, not who they may work for. It is non-compete clauses that limit the ability to move to a competing company. The two types of agreement are legally distinct.

Conclusion

An NDA is one of the most effective and accessible tools for protecting your business's valuable information. It is not only for large companies; sole proprietorships and startups also need to protect their ideas, plans and processes before sharing them with the outside world.

The key to an effective NDA is precision: a clear definition of what is confidential, a defined purpose, a realistic duration and clear consequences on a breach.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer for advice on your specific situation.