Contractor NDA FAQ

A contractor NDA (Non-Disclosure Agreement) is a legal contract that protects confidential information shared between a hiring company and an independent contractor. Unlike employee NDAs, contractor NDAs must address unique issues like IP ownership, multi-client work, and the independent nature of the relationship.

You need a contractor NDA to:

• Protect trade secrets, client lists, and proprietary processes from disclosure
• Clearly define what information is confidential and what isn't
• Establish who owns the intellectual property created during the engagement
• Set expectations for both parties about confidentiality obligations
• Provide legal remedies if confidential information is misused

Unilateral NDA: Only one party (usually the contractor) is bound by confidentiality obligations. The hiring company shares information, and the contractor promises not to disclose it. This is common when the contractor isn't sharing any proprietary information of their own.

Mutual NDA: Both parties are bound by confidentiality obligations. Each promises to protect the other's confidential information. This is appropriate when both parties share sensitive data - for example, if you're sharing your proprietary methodologies or pricing structures with the client.

As a contractor, request a mutual NDA whenever you're sharing your own proprietary information, client lists, or methodologies. It puts both parties on equal footing and is usually easy to obtain.

It depends on the complexity of your engagement:

NDA only may be sufficient when:

• The project is simple and short-term
• Payment terms are straightforward (e.g., hourly rate, weekly payment)
• IP ownership is clear (e.g., everything you create belongs to the client)
• The NDA includes basic IP assignment language

You need a separate contractor agreement when:

• The project is complex with multiple deliverables and milestones
• Payment terms are complicated (retainers, bonuses, royalties)
• IP ownership needs detailed carve-outs
• You need provisions for termination, disputes, or liability

Many contractor agreements include NDA provisions built in, eliminating the need for a separate document. See our NDA vs Work-for-Hire guide for more details.

The NDA itself doesn't determine ownership - that's governed by IP assignment clauses, which may be in the NDA or in a separate agreement. There are three common approaches:

1. Work-for-Hire: The client owns everything you create from the moment it's created. You have no rights to reuse, license, or display the work. This is common for highly custom projects.

2. Assignment: You initially own the work, then transfer (assign) ownership to the client upon completion or payment. Similar end result to work-for-hire, but the transfer is explicit.

3. License: You retain ownership and grant the client a license to use the work. The license can be exclusive or non-exclusive, perpetual or time-limited. This is common when you want to maintain portfolio rights or reuse components.

Important: Always clarify IP ownership before starting work. If the contract is silent on IP, default copyright rules may apply, which vary by jurisdiction and type of work.

Yes, and you absolutely should. A well-drafted NDA or contractor agreement should include a "Pre-Existing Materials" or "Prior Inventions" carve-out. This clause:

• Lists or describes tools, code libraries, templates, and methodologies you owned before the engagement
• Excludes these materials from any IP assignment or work-for-hire provisions
• Typically grants the client a license to use these materials within the project deliverables

Best Practice: Create an "Exhibit A" listing your pre-existing materials before signing any agreement. This creates clear documentation of what you owned beforehand if disputes arise later.

See our Developer NDA guide for specific language protecting code libraries and development tools.

Only if the agreement explicitly allows it. Many NDAs prohibit disclosure of any project details, which would include portfolio displays. To preserve portfolio rights, you need one of these:

Portfolio Carve-Out Options:

• Immediate rights: You can display work immediately upon completion
• Delayed display: You can display work after a waiting period (e.g., 6 months after launch)
• Client approval: You can display work with prior written approval from the client
• Sanitized samples: You can display non-confidential descriptions without revealing proprietary details

Negotiate this upfront: It's much easier to get portfolio rights before you start work than after the project is complete. See our Freelancer NDA for sample portfolio clause language.

Contractor NDAs typically have two relevant time periods:

1. Term of Agreement: How long the NDA is in effect (usually the duration of the project or a fixed period like 1-2 years).

2. Survival Period: How long confidentiality obligations last after the term ends. This is the critical number.

Typical survival periods:

• General confidential information: 2-5 years is standard and reasonable
• Trade secrets: Often protected "for as long as they remain trade secrets" (potentially indefinitely)
• Perpetual/indefinite: Avoid these for general information - they're unreasonable and may be unenforceable

Red flag: If an NDA requires you to keep ALL information confidential forever, push back. Only true trade secrets warrant perpetual protection.

Well-drafted NDAs include standard exclusions for information that isn't truly confidential. These typically include:

• Public information: Information that's publicly available or becomes public (without your fault)
• Prior knowledge: Information you already knew before the engagement
• Independent development: Information you develop independently without using confidential information
• Third-party disclosure: Information you receive from a third party who wasn't bound by confidentiality
• Required disclosure: Information you're legally required to disclose (subpoena, court order, government request)

Watch out for: NDAs that try to remove or limit these standard exclusions. Without them, you could be liable for "disclosing" information that was never truly confidential.

An NDA by itself shouldn't prevent you from working for competitors - it only restricts disclosure of confidential information. However, watch for these traps:

Hidden non-competes: Some NDAs include disguised non-compete provisions that restrict your ability to work in certain areas. These may be labeled as "non-solicitation" or "conflict of interest" clauses.

Overly broad definitions: If "Confidential Information" is defined to include "all information about the client's industry," you effectively can't work for anyone in that industry.

Your obligations:

• You CAN work for competitors on unrelated projects
• You CAN use general skills and knowledge gained during the engagement
• You CANNOT share specific confidential information learned from one client with another
• You should have systems to keep client information separate (information barriers)

See our Negotiation Playbook for tactics to remove hidden non-competes from NDAs.

Accidental breaches happen - you mention something at a conference, send an email to the wrong person, or a laptop gets stolen. Here's what to do:

Immediate steps:

• Stop the disclosure immediately (delete emails, end conversations)
• Document exactly what was disclosed, to whom, and how
• Notify the other party promptly - many NDAs require this
• Take steps to mitigate damage (request deletion, issue cease-and-desist)
• Consult an attorney if the disclosure is significant

Potential consequences:

• Injunction: Court order to stop further disclosure
• Damages: Compensation for actual harm caused
• Contract termination: The client may end your engagement
• Reputation damage: Word spreads in professional circles

See our Breach Response Guide for detailed steps to handle NDA breaches.

Yes, contractor NDAs are generally enforceable, but enforceability depends on several factors:

Factors that strengthen enforceability:

• Both parties received something of value (consideration)
• The confidential information is clearly defined
• Obligations are reasonable in scope and duration
• The information was actually kept confidential
• Standard exclusions are included

Factors that weaken enforceability:

• Overly broad definitions covering public information
• Perpetual duration for non-trade-secret information
• One-sided terms that create an unconscionable contract
• Failure to mark or identify confidential information
• The disclosing party didn't actually keep the information confidential

State law matters: California, for example, has strong policies against overreaching NDAs, while other states may be more permissive. The governing law clause in your NDA determines which state's rules apply.

Companies have several remedies available when an NDA is breached:

Injunctive Relief: A court order requiring you to stop disclosing confidential information. This is usually the first thing a company seeks because damages can't undo disclosure.

Actual Damages: Compensation for provable financial losses caused by the breach - lost sales, increased competition, etc. These can be difficult to prove.

Liquidated Damages: Some NDAs specify a fixed amount payable for breach, avoiding the need to prove actual damages. Courts may not enforce amounts that are unreasonably high.

Attorney's Fees: Many NDAs include a provision requiring the breaching party to pay the other side's legal costs. This can significantly increase your exposure.

Punitive Damages: In cases of willful or malicious breach, courts may award additional damages to punish the wrongdoer. These are rare in contract cases.

Negotiation tip: Try to cap your maximum liability to fees paid or a reasonable fixed amount. See our Negotiation Playbook for sample language.

Working with international clients adds complexity, but you don't necessarily need a completely different NDA. Key considerations:

Governing law: Specify which country/state's laws apply. U.S. contractors typically prefer U.S. law; negotiate for a jurisdiction you understand.

Dispute resolution: Consider where disputes will be resolved. International arbitration may be better than foreign courts.

Data protection: If you'll access personal data, you may need GDPR compliance provisions for EU clients or similar for other jurisdictions.

Export controls: Some technical information may be subject to export restrictions - the NDA should address this.

Language: If the contract is in multiple languages, specify which version controls in case of conflict.

See our International Contractor NDA guide for detailed guidance on cross-border engagements.

When you work through a staffing agency or freelance platform, NDA relationships get more complex:

Typical structure:

• You sign an NDA with the agency (covering their confidential information)
• The agency has an NDA with the end client
• You may also sign a direct NDA with the end client

Key concerns:

• Make sure you're not bound by conflicting obligations
• Clarify who is responsible for what (the agency or you directly)
• Ensure the agency's NDA with the client flows down to protect you
• Watch for the agency claiming ownership of your IP

See our Agency Contractor NDA guide for navigating these relationships.

Many NDAs prohibit or restrict the use of subcontractors. Before bringing in help, check your agreement for:

Common restrictions:

• Complete prohibition on subcontracting
• Requirement for prior written consent
• Requirement that subcontractors sign equivalent NDAs
• You remain liable for subcontractor breaches

If subcontracting is allowed:

• Get signed NDAs from your subcontractors BEFORE sharing any confidential information
• Ensure sub-NDAs have terms at least as protective as your agreement
• Keep records of what information you shared with whom
• Monitor your subcontractors' compliance

See our Subcontractor NDA guide for flow-down provisions and best practices.