What a Basic NDA Should Include, and When to Hire a Lawyer

Why people sign NDAs, and why most are too thin or too heavy

A non-disclosure agreement (NDA) is a short contract in which one side promises to keep the other side's information private. Freelancers sign them before seeing a client's product plans. Founders ask for them before sharing a pitch with a vendor. Small businesses use them before showing pricing or supplier lists to a possible partner. In practice, NDAs tend to go wrong in two ways: a one-paragraph promise that says nothing precise, or a ten-page document copied from a large company that neither party has read.

This guide walks through what a basic NDA needs, what ToolHive's NDA generator actually produces, what it leaves out, and a simple way to decide whether a template is enough for your situation. It is general information, not legal advice, and it does not replace a lawyer who has read your facts.

What the NDA generator produces

You enter three things: the disclosing party, the receiving party, and the term in years (the default is 2). The tool then writes a short one-way agreement dated today. It has four numbered clauses and signature lines for both names:

Confidential information. All non-public business, technical, financial or commercial information disclosed by the disclosing party.
Obligations. The receiving party keeps the information strictly confidential and uses it only to evaluate the business relationship.
Exclusions. Information that is publicly known, independently developed, received lawfully from a third party, or required to be disclosed by law is not covered.
Term. The number of years you entered, counted from the date of signing.

The output is plain text that you copy into your own document. Nothing is stored or sent anywhere. The agreement is one-way: only the disclosing party's information is protected. If both sides will share sensitive material, a one-way text protects only half of the exchange, and you would need to adapt it so both parties are bound.

A worked example

Suppose Meera, a freelance product designer, is asked by a startup founder, Karan, to review an unreleased app before giving a quote. Karan is the disclosing party; Meera is the receiving party. They agree on a term of 3 years. Entering "Karan Joshi (disclosing party)", "Meera Nair (receiving party)" and 3 gives you an agreement that says, in effect:

Meera will keep non-public business, technical, financial and commercial information from Karan strictly confidential.
She will use it only to evaluate working with him, so she cannot reuse his roadmap in another client's project.
Anything already public, or that she developed independently or got lawfully from someone else, is outside the agreement.
The agreement runs for 3 years from signing.

That is enough for a first conversation. Now read it as Meera or Karan would, and notice what is missing. Does Meera have to delete the files after the call? Which court decides a dispute? What if she shares the roadmap with a subcontractor? The template is silent on all of this, which leads to the next section.

What a fuller NDA usually adds

The generator's four clauses cover the core promise. Lawyers typically add the following, and the tool does not include any of it:

Addition	Why it matters
Governing law and jurisdiction	Names the law and the courts that will hear a dispute, so nobody argues about where to file.
Remedies for breach	Can state that the disclosing party may seek an injunction (a court order to stop a leak) rather than only compensation after the harm is done.
Return or destruction of materials	Says what happens to documents and files when the relationship ends.
Permitted recipients	States whether the receiving party may share information with employees, advisers or subcontractors, and under what conditions.
Survival	Clarifies whether obligations continue after the agreement ends, for example for trade secrets that stay sensitive for longer than the stated term.
Marking and definition	Decides whether only information labelled "confidential" is covered, or everything disclosed. The tool's definition is broad: all non-public business, technical, financial or commercial information.
Stamp duty	Stamp duty on agreements is set by state law, so the amount and process depend on where you sign or use the document.

Two Indian points that catch people out

Stamping

Under Section 35 of the Indian Stamp Act, 1899, an instrument that is chargeable with duty but not duly stamped cannot be admitted in evidence. Courts have treated this bar as strict, and the defect can usually be cured later by paying the duty and a penalty. Stamp duty rates and rules differ between states, so check what applies where you sign, or ask a local lawyer or stamp vendor. A signed but unstamped NDA can leave you in an awkward position exactly when you need it.

Confidentiality is not a ban on competing

Section 27 of the Indian Contract Act, 1872 makes agreements that restrain a person from carrying on a lawful profession, trade or business void, with a narrow exception for the sale of goodwill. A promise not to disclose or misuse specific confidential information is generally treated differently from a promise not to work in a field. So an NDA that tries to stop a freelancer from ever designing for another startup is likely to be challenged. A good NDA protects information, not the other party's livelihood. The tool's wording is limited to confidentiality and use of information, which is the safer scope, but this is a point on which a lawyer's view matters in a real dispute.

A simple test: template or lawyer?

Ask these five questions. Each "yes" moves you toward professional drafting.

Is the information a trade secret or the core of the business? Source code, formulas, unreleased product designs and customer databases deserve more than a four-clause template.
Is money at stake that would hurt if it leaked? If the loss from a leak is larger than a lawyer's fee, pay the fee.
Are investors, acquirers or large companies involved? They will usually send their own NDA, and you should read it before signing.
Will it run for years or involve many people? Longer terms and several recipients need clear rules on who can see what.
Does either side operate across borders? Foreign law, foreign courts and cross-border enforcement are specialist territory.

If every answer is "no", for example a freelancer and a small client discussing a modest project and a rough quote, a short template that both sides understand is a reasonable start. Read it aloud together, fill in the real names, and add a line on governing law if you can. If you are unsure, treat it as a "yes".

Practical habits that matter more than the wording

Use full legal names. Use the registered company name rather than a brand name, and an individual's full name.
Sign before you share. An NDA signed after the pitch protects nothing already said.
Share only what is needed. The less you disclose, the less you need to protect.
Keep signed copies. Both parties should keep a copy, with the stamp if one is required.
Put the term in your calendar. Know when the obligation ends, and remember trade secrets may need protection for longer.

An NDA often sits alongside other paperwork in a client engagement. Once the work starts, you will want a clear invoice. ToolHive's invoice generator produces a text invoice with a single description and amount, and the GST calculator helps you check the tax portion of a price. Neither is a substitute for your accountant's advice on GST registration or invoice format.

Limits: what this does not cover

It is a starter template. The generated text does not include governing law, breach remedies, return of materials or survival clauses.
It is one-way. It protects the disclosing party's information only.
It does not handle stamping. The tool produces text. It does not calculate or pay stamp duty and does not know your state's rules.
It does not check enforceability. Whether a clause will hold up depends on the facts and on how a court reads it.
It is not legal advice. This article is general information. For trade secrets, investor discussions or high-value deals, have a lawyer review or draft the agreement.