NDA vs. non-compete agreements — what’s the difference?

Learn about the difference between NDAs and non-compete agreements and when to use each type of document.

NDAs and non-compete agreements are different types of contracts between businesses or individuals that are often confused with each other. However, they provide very different protections in different circumstances. So, what is the difference between non-compete and non-disclosure agreements (NDAs)?

This article breaks down the differences between the two and shows you when and how to use each one.

What is an NDA?

NDA stands for “non-disclosure agreement.” It is a contract between two parties that binds one (or sometimes both) of them to secrecy on certain shared confidential information. These documents are often given to employees handling sensitive information during their employment or even between individuals discussing confidential information.

What is a non-compete agreement?

A non-compete agreement is an agreement between an employee and their employer that specifies a period of time after their employment ends where they cannot work for a competing company. This type of agreement is common among businesses in steep competition for talent or for high-level employees who have access to sensitive company information.

Now that you know their definitions, let’s explore the differences between an NDA and a non-compete agreement.

Major differences in NDA vs. non-compete.

What is the difference between non-compete and non-disclosure agreements? While they both serve to protect the interests of companies, NDAs and non-competes do so in different ways. NDAs are designed to protect confidential information and trade secrets from unauthorized disclosure, while non-compete agreements are crafted to prevent former employees or business associates from engaging in activities that could compete with their former employer or partner. Let’s go over the major differences between NDAs and non-compete agreements:

• Purpose. NDAs protect confidential information and trade secrets, while non-compete agreements prevent competition by former employees or partners.

• Duration. NDAs are tied to the duration of confidentiality, while non-compete agreements enforce restrictions for a specific post-termination period.

• Applicability. NDAs are used more broadly for information protection. Non-compete agreements are mainly applied in employment to curb competition.

• Geographic limits. NDAs often have no geographic restrictions unless necessary. Non-compete agreements may include specific geographic boundaries.

• Enforceability. NDAs are easier to enforce and aimed at specific data protection, while non-compete agreements are subject to scrutiny for reasonableness.

• Remedies for breach. Breach of NDAs typically results in damages or injunctions. A breach of non-compete agreements may lead to damages or restrictions.

What should you use for a non-compete vs. non-disclosure?

A non-compete agreement is only used between an employee and a business to specify who may hire them should they leave the company. An NDA is much broader and is used to protect any personal or business-related information that one or both parties want to remain confidential. Here are a few examples of the differences between non-compete versus non-disclosure agreements.

Non-compete agreement:

• Clear and specific restrictions

• Defined duration

• Geographic scope

• Consideration or compensation

• Dispute resolution provision

NDA:

• Clear definition of confidential information

• Parties involved (disclosing and receiving parties)

• Duration of confidentiality

• Obligations and consequences for breaches

• Signatures of involved parties

Sign NDA or non-disclosure agreement PDF with e-signatures.

No matter which one you’re using, e-signatures and digital documents are a great way to add extra security to your NDA or non-compete agreement PDF, thanks to their built-in security features. In case you didn’t know, electronic signatures are legally binding.

Find out more about everything that's possible with digital documents today.