Summary for Founders
- Use a one-way NDA when only your startup is disclosing confidential information.
- Use a mutual NDA only for true two-way disclosure.
- Do not accept “standard” terms without checking how they allocate confidentiality risk.
- Make sure the NDA reflects the actual flow of information in the deal.
- Crowley Law LLC helps founders structure NDAs that protect intellectual property and avoid unnecessary obligations.
One-Way NDA vs Mutual NDA: Match the Structure to the Flow of Information in Your Deal
When you need to share sensitive information with a potential investor or business partner, a nondisclosure agreement (“NDA”), sometimes called a confidential disclosure agreement, is often the first contract on the table.
Founders still get stuck on one practical choice: should this be a one-way NDA or a mutual NDA?
That choice is not cosmetic. It affects who carries the confidentiality burden, how the recipient may use the information and how tightly further disclosure is controlled as discussions move forward.
In this guide, we explain the differences and the overlap between one-way NDA vs mutual NDA so you can choose the structure that fits the actual flow of information in your deal.
The Moment This Becomes a Founder Problem
Eventually, you have to stop building in private. To raise money, test a product or start diligence, you will need to show other people how your technology works and that means sharing details you would rather keep tight.
The friction usually starts when the other side sends a “standard” NDA. In life sciences and other technology companies, there is rarely anything standard about it. An NDA allocates risk, limits how the recipient can use what you disclose and sets the rules for what happens after the meeting ends.
That is why the one-way vs mutual decision matters. It changes who takes on obligations and how exposed you are, especially when only one side expects to share meaningful confidential information.
This guide is for you if:
- You are entering technical diligence and need to share proprietary source code, molecular structures or unpublished data
- You are evaluating vendors like a Contract Research Organization (“CRO”) that need roadmap access to scope their work
- A potential strategic partner will not meet without an NDA in place
- An investor or lead is pushing a mutual NDA and you do not expect any real disclosures in return
We explain how to match the NDA structure to the actual flow of information so you can protect proprietary information without slowing the deal.
One-Way (Unilateral) vs. Mutual (Bilateral) NDA
| Feature | One-Way (Unilateral NDA) | Mutual (Bilateral NDA) |
| Protection | Disclosing party only | Both parties |
| Typical use | Contractors and vendors | Joint ventures and mergers and acquisitions (“M&A”) talks |
| Obligations | Receiving party carries them | Both parties carry them |
| Signal | More protective | More collaborative |
What Is a One-Way NDA?
A one-way NDA (also called a unilateral NDA) fits situations where only one party expects to disclose meaningful confidential information. The disclosing party shares information and the receiving party agrees to keep it confidential and use it only for the stated purpose.
Founders usually use a one-way NDA when the startup is the only side putting valuable information on the table. That includes:
- Hiring discussions
- Early product pitches
- Vendor engagements such as freelance developers, consultants or other service providers
In these settings, the startup is the one exposing trade secrets and sensitive business information.
What Is a Mutual NDA?
A mutual NDA (also called a bilateral NDA) is built for two-way exchanges. Each party may disclose confidential information and each agrees to protect what it receives.
This structure is common when two life sciences and other technology companies are evaluating a research collaboration, licensing discussion or other high-stakes partnership where both sides will share technical details or business strategy.
A mutual NDA creates symmetry because each party is both a discloser and a recipient, with matching obligations to protect the other side’s confidential information.
The Founder Decision Rule
| Use a One-Way (Unilateral NDA) When | Use a Mutual (Bilateral NDA) When |
| Only your company is disclosing meaningful confidential information | Both sides expect to disclose confidential information |
| You are explaining how the technology works and the other side is evaluating | You are co-developing or exchanging technical details in both directions |
| You are working with a service provider such as a freelance developer or consultant – but note that more protections may be required in this situation | You are evaluating a research collaboration, licensing discussion or joint venture |
| You are hiring and need to share internal plans, product details or sensitive business information | Each side needs to share proprietary constraints or unpublished data to assess the deal |
| You do not expect to receive confidential information in return and want clean risk allocation | The discussion requires reciprocal protection because both sides are opening up their playbooks |
The Clauses That Decide Whether You Are Protected in Practice
While the “One-way vs. Mutual” label sets the direction, the clauses determine whether the agreement protects you when confidential data is used outside the purpose and when a dispute arises that leads to legal action.
| Clause to Check | Why It Matters to You |
| Definition of “Confidential Information” | If the definition is too narrow, important disclosures fall outside protection. You want it to cover what you actually share, including technical data, business information and materials shown on screen or shared verbally during fast discussions. |
| Purpose (Permitted Use) | This limits what the recipient can do with your information. If it is broad, the recipient may argue it can use your information for internal work that competes with you. A tight purpose gives you leverage if the information is used outside the deal. |
| Confidentiality obligations and access limits | This sets the standard of care and who can see the information. “Need-to-know” limits reduce leakage. Watch for affiliate or third-party sharing that lets your information move inside a corporate group without your control. |
| No license and no ownership | An NDA protects secrecy, not ownership. This clause helps prevent the disclosure from being used later as a basis for claiming IP rights, implied licenses or ownership interest in your technology or trade secrets. |
How Crowley Law LLC Helps Founders Think Through NDA Structure
At Crowley Law LLC, we help founders put the right confidentiality frameworks in place early. If you are building something that creates real competitive advantage, now is the time to structure protection around it.
We help our clients to:
- Match the NDA type to the deal stage
We assess whether the conversation is truly one-way or two-way and structure the agreement accordingly so founders do not take on unnecessary confidentiality obligations. - Align the definition of confidential information with the actual disclosure flow
We tailor the definition to cover technical data, business strategy and process information without overreaching in ways that trigger pushback. - Narrow the permitted purpose
We draft purpose clauses tied to a specific diligence stage, collaboration or service scope to reduce the risk of competitive misuse. - Control affiliate and third-party sharing
We place limits on internal distribution within large organizations and require downstream confidentiality commitments that mirror the primary agreement. - Protect intellectual property boundaries
We include clear no license and no ownership provisions to reduce the risk that disclosure is later reframed as a contribution or implied rights transfer. - Balance speed with protection
In fast-moving life sciences and other technology transactions, we seek to protect critical assets without slowing down fundraising, diligence or collaboration.
Contact Crowley Law LLC to discuss how to frame your nondisclosure agreements before the next critical disclosure happens.
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FAQs
| FAQ | Answer |
| What Are the Three Types of NDA? | One-way (unilateral) NDA: One party discloses confidential information and the other party agrees to protect it. Mutual (bilateral) NDA: Both parties may disclose confidential information and each agrees to protect what it receives. Multilateral NDA: Three or more parties share confidential information under one agreement. |
| What Does a Mutual NDA Mean? | A mutual NDA is an agreement where both sides may disclose confidential information and each side agrees to keep the other side’s information confidential. Each party can be a discloser and a recipient depending on what is shared. |
| What Is a One-Way NDA? | A one-way NDA applies when only one side is expected to disclose meaningful confidential information. The receiving party agrees to protect it and use it only for the agreed purpose. This is common when a startup shares proprietary technology, trade secrets or sensitive business information with a vendor, consultant or potential partner. |
| When Should a Startup Use a Mutual NDA? | Use a mutual NDA when you reasonably expect a true two-way exchange of confidential information, such as during collaboration discussions, licensing talks or joint development. If you do not expect meaningful disclosures from the other side, a one-way NDA is usually cleaner because it avoids unnecessary obligations. |
| What Counts As Confidential Information? | Confidential information often includes:Technical data: Source code, model architecture, formulas, lab results, protocols, manufacturing steps.Business data: Customer lists, pricing models, financial data, marketing strategy, business plans.Materials: Prototypes, samples and information shown or shared during meetings. |
The foregoing analysis is for educational purposes only and does not constitute legal advice. You should engage an experienced lawyer to help you deal with any issues of this type as they apply in your unique situation.