Ontario NDAs and Confidentiality Agreements: What Business Lawyers Draft (2026 Guide)

Definition of Confidential Information

Issue: This is the most negotiated clause. Disclosing parties want broad definitions; receiving parties want narrow ones. The definition determines what is protected.

Best practice: Include: written information marked confidential + oral information confirmed in writing within X days + trade secrets regardless of marking. Exclude: public information, prior knowledge, independent development, third-party disclosure without restriction.

Permitted Uses

Issue: The NDA must specify the purpose for which confidential information can be used. Information shared for a due diligence review should not be usable for a competing product launch.

Best practice: Define the permitted purpose narrowly: “solely for the purpose of evaluating a potential acquisition of the Disclosing Party.” Include a list of permitted recipients (directors, officers, lawyers, accountants, advisors) with a need-to-know limitation.

Confidentiality Period

Issue: Most NDAs set a confidentiality period of 2-5 years. True trade secrets may warrant longer or indefinite protection. Employment NDAs often have no expiry for genuine trade secrets.

Best practice: Distinguish between categories: general confidential information (3-5 year period) vs trade secrets (indefinite or as long as they remain trade secrets). Courts are more receptive to indefinite protection for genuine trade secrets.

Return or Destruction

Issue: What happens to confidential information after the purpose is complete or the NDA expires? Many receiving parties prefer destruction to returning information.

Best practice: Require written certification of destruction within X days of termination. Carve out: information retained in automated backup systems that cannot practicably be deleted (subject to ongoing confidentiality obligations).

Residuals Clause

Issue: A residuals clause allows a receiving party to use “general knowledge, skills, and experience retained in unaided memory” even after the NDA — potentially allowing them to use learned information in their own products.

Best practice: As disclosing party: resist or narrow residuals clauses. As receiving party: negotiate for a residuals clause to protect employees who may later work on competing products using only their retained knowledge.

Injunctive Relief

Issue: Standard NDA clause acknowledges that monetary damages are inadequate for breach and that injunctive relief should be available without posting a bond.

Best practice: Include an explicit acknowledgment that breach would cause irreparable harm and that injunctive relief is an appropriate remedy without proof of actual damages — this language supports the RJR-MacDonald irreparable harm analysis.

Are NDAs enforceable in Ontario?

Yes, NDAs are enforceable in Ontario as contracts if they meet basic contract requirements: offer, acceptance, and consideration. NDAs signed before any confidential information is disclosed must be supported by independent consideration (not just the disclosure itself). Employment NDAs that are overly broad may be struck down as restraints of trade. Courts will consider whether the scope of confidential information is defined reasonably and whether the confidentiality period is reasonable.

What is the difference between a unilateral and mutual NDA?

A unilateral NDA protects one party's confidential information — one party discloses, the other receives and is bound to keep it confidential. Used when only one party is sharing sensitive information (e.g., a company pitching to a potential investor or partner). A mutual (bilateral) NDA binds both parties to keep each other's information confidential. Used when both parties will be sharing sensitive information with each other (e.g., two companies exploring a joint venture or merger).

What information is excluded from most Ontario NDAs?

Standard carve-outs from NDA protection include: (1) Information already in the public domain through no breach of the NDA; (2) Information the receiving party already knew before disclosure (documented by prior records); (3) Information the receiving party independently developed without reference to the disclosed information; (4) Information received from a third party who was not under a confidentiality obligation; (5) Information required to be disclosed by law, court order, or regulatory requirement (with notice to the disclosing party).

What remedies are available for breach of an NDA in Ontario?

Remedies for NDA breach in Ontario include: (1) Injunctive relief — an interlocutory or permanent injunction to stop ongoing disclosure or use of confidential information; (2) Damages — compensatory damages for losses caused by the breach, which can be difficult to quantify but may include lost profits, damage to competitive position, and lost business opportunities; (3) Account of profits — in equity, the court can order the breaching party to disgorge profits made using the confidential information; (4) Specific performance — if the NDA includes affirmative obligations, courts may order specific performance.