Confidentiality Agreements (NDA) in Germany: What They Are and How to Draft Them Correctly

In today’s business world, information is often more valuable than physical assets. That’s why protecting sensitive data and trade secrets is crucial. A Confidentiality Agreement, also known as a Non-Disclosure Agreement (NDA) or Vertraulichkeitsvereinbarung in German, is a widely used legal tool to ensure such protection. In Germany, NDAs are particularly important during negotiations, partnerships, and joint projects. This article explains what a confidentiality agreement is, its legal basis in Germany, and how to draft an effective and enforceable NDA.

  1. 1. What Is a Confidentiality Agreement (NDA)?
  2. 2. Legal Framework in Germany
  3. 3. Why Is an NDA Useful?
  4. 4. Key Elements of an Effective Confidentiality Agreement
  5. 5. Practical Tips for Drafting an NDA
  6. 6. Sample NDA Template (Simplified – English)
  7. 7. Common Mistakes to Avoid
  8. 8. Useful Links and Resources
  9. Conclusion

1. What Is a Confidentiality Agreement (NDA)?

A Confidentiality Agreement (NDA) is a legal contract between two or more parties in which they agree to keep specific information confidential and not disclose it to third parties without prior consent. The primary goal is to protect trade secrets, technical know-how, or confidential business data from unauthorized use or disclosure.

There are two main types of NDAs:

  • Unilateral NDA: One party discloses information, and the other party agrees to keep it confidential.
  • Mutual (Bilateral) NDA: Both parties exchange confidential information and agree to protect each other’s disclosures.

2. Legal Framework in Germany

The key legal sources governing confidentiality agreements in Germany are:

  • The German Civil Code (Bürgerliches Gesetzbuch – BGB), particularly the general rules on contracts (§§ 145 ff.).
  • The Act on the Protection of Trade Secrets (Geschäftsgeheimnisgesetz – GeschGehG), in force since 2019, which implements the EU Directive 2016/943.

What Counts as a Trade Secret Under the GeschGehG?

A trade secret is defined as:

  1. Information that is not generally known or readily accessible.
  2. Information with commercial value due to its secrecy.
  3. Information that is subject to reasonable steps to keep it secret (e.g., by using an NDA).

3. Why Is an NDA Useful?

✅ Protecting sensitive information, such as technical drawings, formulas, prototypes, customer lists.
✅ Securing negotiation positions, e.g., during M&A transactions, joint ventures, or strategic partnerships.
✅ Creating legal certainty and fostering trust between the parties.

4. Key Elements of an Effective Confidentiality Agreement

For an NDA to be enforceable and effective, it should include the following components:

1. Preamble / Purpose

A short introduction outlining why the parties are entering into the agreement.

2. Definition of Confidential Information

Clearly describe what is considered confidential information, such as:

  • Business plans
  • Technical documentation
  • Customer and supplier data
    ➡ Tip: Avoid vague terms—be as specific as possible!

3. Obligations of the Parties

  • Confidentiality obligation: No disclosure to third parties without prior written consent.
  • Limitation of use: The information can only be used for the defined purpose of the agreement.

4. Exceptions to Confidentiality

Typical exceptions include:

  • Information already publicly available.
  • Information lawfully obtained from third parties.
  • Information that must be disclosed due to legal requirements.

5. Duration of Confidentiality

Specify how long the confidentiality obligations will last. Typically 2 to 5 years, but for sensitive technologies, it can be longer or indefinite.

6. Penalties and Damages

  • Contractual penalty clause: A fixed monetary penalty for each breach (e.g., €10,000 per breach).
  • Right to claim compensation for damages resulting from a violation.

7. Return or Deletion of Information

Once the collaboration ends, documents and data should be returned or permanently deleted.

8. Governing Law and Jurisdiction

In cross-border agreements, clearly state that German law applies and designate a jurisdiction (e.g., Munich, Berlin).

5. Practical Tips for Drafting an NDA

✅ Customize the agreement: Avoid generic templates; tailor the NDA to your project and sector.
✅ Precise definitions: Make sure the definition of “confidential information” is clear.
✅ Realistic penalties: The penalty amount should be high enough to deter breaches but not excessive.
✅ Written form requirement: All amendments should be made in writing.
✅ Documentation of disclosure: Keep records of when and what information was shared.

➡ Tip for Startups

Investors often ask for transparency but may not sign NDAs in early discussions. Be cautious about when and how you disclose sensitive information.

6. Sample NDA Template (Simplified – English)

Note: This is a basic example. For legally binding agreements, consult a lawyer, especially in complex or international situations.

plaintextCopierModifierCONFIDENTIALITY AGREEMENT (NDA)

Between

[Party A Name, Address]  
and  
[Party B Name, Address]

§1 Purpose  
The parties intend to exchange confidential information in the context of [Project/Discussion]. This agreement governs the protection of such information.

§2 Definition of Confidential Information  
Confidential Information includes all written, oral, or other forms of information marked as confidential or which by nature should be regarded as confidential.

§3 Confidentiality Obligations  
The receiving party agrees to:  
a) Keep the confidential information strictly confidential;  
b) Not disclose it to third parties without prior written consent;  
c) Use it solely for the purpose stated in §1.

§4 Exceptions  
This agreement does not apply to information that:  
a) Is publicly known without breach of this agreement;  
b) Was lawfully obtained from third parties;  
c) Must be disclosed by law or court order.

§5 Duration  
This confidentiality obligation remains in effect for 5 years after signing this agreement.

§6 Contractual Penalty  
If this agreement is breached, the violating party agrees to pay a penalty of [Amount] €. Additional claims for damages remain unaffected.

§7 Final Provisions  
Any amendments must be made in writing.  
This agreement is governed by German law.  
Jurisdiction is [City].

Date, Place  
Signatures of both parties

7. Common Mistakes to Avoid

🚫 Vague definitions: Make sure confidential information is clearly described.
🚫 No penalties: Without a contractual penalty, breaches are less deterred.
🚫 No use limitation: Ensure information can only be used for specific purposes.
🚫 No return or deletion clause: Ensure data is returned or destroyed after termination.

8. Useful Links and Resources

Here’s a list of helpful links and resources for drafting NDAs and protecting trade secrets in Germany:

Legal Framework

Templates and Samples

Information and Practical Guides

Digital Tools & Services

Conclusion

A Confidentiality Agreement (NDA) is a key tool to protect sensitive information and foster trust in business relationships. In Germany, it’s essential for startups, investors, developers, and corporations alike. For legal certainty, NDAs should always be custom-tailored and ideally reviewed by a lawyer, particularly in international contexts.

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