In tech, your biggest assets aren't always on display.
It could be a machine-learning model you trained for months. A clever API that powers your SaaS. A product prototype is still under wraps. Or a roadmap that could disrupt the market.

Whatever it might be, when it's time to share that innovation with investors, vendors, or collaborators — you're opening a door.

Legal protection makes sure not just anyone walks through it with your ideas in hand.

Most tech leaders find themselves asking:
Should I use a Non-Disclosure Agreement (NDA) or a Confidentiality Agreement (CA)?

While both are meant to protect sensitive information, the right one can offer better control over your idea — and peace of mind.

Let's explore the differences, what each offers, and when to use them for the best protection.

Are NDA and Confidentiality Agreements the Same?

You might've heard people use “NDA” and “Confidentiality Agreement” like they mean the same thing. In many ways, they do — but there are some key differences worth knowing.

Both agreements add a layer of protection to keep private information from being leaked or misused. But it's how and when you use them that sets them apart.

• Use an NDA when you're sharing sensitive info with someone outside your company — like an investor, client, or potential business partner.
   
• Use a Confidentiality Agreement when someone inside your system — like an employee or freelancer — is being given access to your data, code, or tools.

In simple terms:
NDA = external protection
Confidentiality Agreement = internal control

They're both legally valid. Just meant for different relationships. And sometimes? You'll need to use both.

Want to know more? Watch this video on IP Protection and why it is essential. 

When to use NDA and Confidentiality Agreement? 

Though the terms are often used interchangeably, there's a slight distinction between them.

Non-Disclosure Agreement (NDA)

An NDA is a contract that stops the other party from sharing your confidential information. Think of it like a legal lock on your data. It's most commonly used when you're sharing code or insights with external parties — like during a partnership discussion or product pitch.

Confidentiality Agreement (CA)

A CA (Confidentiality Agreement) does the same but is often used internally. For example, you'll find it in employee onboarding contracts or vendor agreements. It ensures that those who work with your system don't expose it to the outside world — even accidentally.

In short:

• NDAs are for people outside your company.
   
• CAs are for people inside your operations.

Do you know the basic types of intellectual property rights for your business? 

Real-World Scenarios: When to Use Each

Example 1: The External Pitch – NDA

You're showcasing your app to a potential investor. For example, you want to share your backend logic and show off your code's efficiency. That's valuable information. An NDA ensures that the investor can't walk away with your idea or pass it to a competitor.

Example 2: The Freelancer – CA

You've hired a freelance developer to build a payment module. You'll be giving access to your core repo. A CA keeps that code confidential — not just during the contract, but even after the freelancer moves on.

Simple Difference: NDA vs. Confidentiality Agreement

Here's a side-by-side look to help you choose:

Best Practices: How to Strengthen Legal Protection

1. Never rely on verbal agreements.
   Get everything in writing — signed, sealed, and legally reviewed.
    
2. Customize each agreement.
   Generic NDAs from the internet can leave gaps. Tailor them to your project, timelines, and jurisdiction.
    
3. Mention return or deletion of assets.
   What happens to the code after the contract ends? Spell it out.
    
4. Include non-compete clauses where needed.
   Especially with contractors who work with competitors.
    
5. Consult a legal expert.
   Tech law is niche. A qualified tech attorney can help bulletproof your documents. 

Frequently Asked Questions (FAQs)

Q1. Can I use both an NDA and a CA in one project?
Yes, using both is not only allowed — it's often recommended. An NDA is useful when you're discussing or sharing ideas with external stakeholders. A CA comes into play when someone within your ecosystem is handling sensitive information. Together, they offer layered legal protection for your intellectual property.

Q2. Is one stronger than the other legally?
Both agreements are legally enforceable when drafted correctly. The difference lies in their scope and intent — NDAs are typically used externally, CAs internally. Neither is "stronger" on its own; what matters is how clearly terms are defined. Well-structured clauses and proper jurisdiction make all the difference in enforceability.

Q3. What must be included to protect the code?
Make sure the agreement clearly defines what counts as confidential code — including source files, scripts, backend logic, and APIs. It should also mention how the code can be used, shared, or stored. Add clauses that outline breach consequences and data return obligations. The more specific you are, the better the protection.

Q4. What if someone violates the NDA or CA?
A breach of either agreement can lead to serious legal consequences, including financial penalties or court injunctions. If your contract is properly worded, you can take legal action to stop further misuse. Evidence of the violation, like audit logs or communication records, strengthens your case. Always consult a lawyer before pursuing action.

Q5. Are NDAs enough to prevent code theft?
NDAs serve as a legal shield — not a technical lock. They can't stop someone from stealing code but give you legal standing if it happens. For true protection, combine NDAs with smart practices like access control, version tracking, and code watermarking. Think of NDAs as part of a larger security framework, not the only one.

Conclusion: Which Agreement Should You Choose?

If your goal is to protect code, you shouldn't choose either — you should use both, when applicable.

• Use an NDA when sharing information outside your team.
  
   
• Use a CA when allowing someone to access your system from the inside.
   

For maximum protection, combine strong legal documents with smart access control and good development hygiene.

Remember: Protecting your intellectual asset is not just about trust — it's about planning, clarity, and legal foresight.

If you're planning to collaborate or outsource development, make sure you're using the right agreement. Talk to our experts at Oodles to make an informed decision.