Non-Disclosure Agreements in South Africa: What You Need to Know

What is an NDA?

A non-disclosure agreement (NDA) — also called a confidentiality agreement — is a contract in which one or more parties agree to keep specified information confidential and not to use it for any purpose other than the one for which it was disclosed. NDAs are used in a wide range of commercial contexts, including:

• Pre-contractual negotiations and due diligence.
• Employment relationships (protecting trade secrets and client information).
• Franchise and licensing arrangements.
• Technology development and software licensing.
• Sale-of-business transactions.

Unilateral vs Mutual NDAs

A unilateral NDA imposes confidentiality obligations on one party only — typically the party receiving the information. A mutual NDA imposes obligations on both parties. Use a mutual NDA where both parties will be sharing confidential information with each other.

Key Clauses in a South African NDA

1. Definition of Confidential Information

This is the most important clause in any NDA. The definition must be broad enough to cover all the information you want to protect, but not so broad as to be unenforceable. Consider including:

• Technical information (formulas, processes, designs, software).
• Business information (financial data, business plans, pricing, client lists).
• Information disclosed orally (with a requirement to confirm in writing within a specified period).

Exclude information that is already in the public domain, that the recipient already knew, or that the recipient receives independently from a third party without restriction.

2. Permitted Use

Specify the purpose for which the confidential information may be used. A recipient who uses confidential information for any purpose other than the permitted purpose is in breach of the NDA — even if they do not disclose it to third parties.

3. Obligations of the Receiving Party

The receiving party should be required to:

• Keep the information confidential using at least the same degree of care as they use for their own confidential information (and in any event, reasonable care).
• Restrict access to the information to employees and advisers who need to know it for the permitted purpose.
• Not copy or reproduce the information except as necessary for the permitted purpose.
• Return or destroy the information on request or on termination of the NDA.

4. Duration

Specify how long the confidentiality obligations last. A period of two to five years is common for commercial NDAs. For trade secrets and genuinely proprietary information, consider an indefinite obligation — though courts may scrutinise very long periods.

5. Remedies

Include an acknowledgement that breach of the NDA will cause irreparable harm and that the disclosing party is entitled to seek an interdict without proof of actual damage. This makes it easier to obtain urgent relief if the NDA is breached.

Common Mistakes

• Defining confidential information too narrowly: Leaving out categories of information that are genuinely sensitive.
• No permitted use clause: Allowing the recipient to use the information for any purpose, not just the one intended.
• No return or destruction obligation: Leaving the recipient in possession of confidential information indefinitely.
• Using a generic template: A template NDA may not cover the specific information or context of your transaction.

How ClauseWise Can Help

ClauseWise drafts and reviews NDAs at fixed prices, tailored to your specific transaction and the information you need to protect. Submit an intake form to get started, or visit our Free Legal Resources page for a template NDA.

ClauseWise provides independent commercial legal support, contract review, dispute resolution support, business risk advisory and document review services to individuals and businesses across South Africa. Where a matter requires formal legal representation, ClauseWise may facilitate an appropriate referral to an independent suitably qualified attorney or advocate through its established panel network.