NDAs vs. Non-Compete vs. Non-Solicit – What’s the Difference?

When working with employees, contractors, or even co-founders, legal boundaries matter. But many startups and businesses confuse three key agreements:

Non-Disclosure Agreements (NDAs)
Non-Compete Clauses
Non-Solicitation Clauses

While they’re all about protection, each serves a very different legal purpose.

Let’s break it down.

1. NDA – Non-Disclosure Agreement

Purpose: To protect confidential information from being shared with outsiders.

Common Use:
– Sharing pitch decks, code, or business models with investors or employees.
– Discussing ideas with vendors, freelancers, or marketing agencies.

Key Features:

• Defines “confidential information”

• Obligates both parties (or one) to maintain secrecy

• Often lasts even after the contract ends

Good to know: NDAs are usually enforceable in India and essential for startups sharing sensitive data.

2. Non-Compete Clause

Purpose: To prevent a former employee or contractor from working with competitors or starting a competing business.

Common Use:
– When a tech employee has access to product strategy or IP
– In high-level executive contracts

Key Features:

• Specifies industries or companies considered “competition”

• Limits on geography and time period

Legal Alert: Non-compete clauses are generally unenforceable in India after employment ends, under Section 27 of the Indian Contract Act.

But they may still be valid during employment.

3. Non-Solicitation Clause

Purpose: To stop ex-employees or vendors from “poaching” your clients, employees, or vendors.

Common Use:
– In service businesses (agencies, consulting, SaaS)
– With sales and marketing hires

Key Features:

• Prevents approaching former clients or staff for a set time

• Can be more enforceable than non-compete clauses

Good to know: Indian courts may enforce non-solicit clauses if they’re reasonable and narrowly defined.

TL;DR – Which One Do You Need?

AgreementPreventsEnforceable in India?NDAInfo leaks YesNon-CompeteCompeting work Post-employment: Mostly NoNon-SolicitPoaching clients/staff Sometimes (if reasonable)

Final Thoughts

Whether you’re hiring your first employee or signing a deal with a vendor, having the right legal protection in place is non-negotiable.

NDAs are a must.
Non-compete: use with caution.
Non-solicit: smart for protecting business relationships.

Need help drafting enforceable contracts? Let’s talk.

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