Confidentiality clause vs. NDA: what's the difference?

An NDA typically comes first. Before a partnership, an acquisition discussion, a vendor evaluation, or a pitch, the parties sign an NDA so they can talk freely before there is any deal to sign.

A confidentiality clause comes later, inside the actual agreement. Once there is a services contract, a licence, or an employment contract, confidentiality becomes one obligation among many.

Less than people assume, but the differences are real:

• Remedies — a standalone NDA carries its own remedies. A clause inside a larger contract is usually subject to that contract's liability cap, which can dramatically reduce its value. Check whether confidentiality is carved out of the cap.
• Duration — an NDA has its own term. A clause depends on the survival provision of the host contract; if there is no survival clause, obligations may lapse at termination.
• Termination — ending the main contract may end the confidentiality clause too, unless survival is spelled out. Ending the relationship does not end an NDA that has its own term.
• Scope — an NDA covers the whole exploratory discussion. A clause typically covers information exchanged under that specific contract, which may be narrower than intended.

This is the practical problem. You sign an NDA in January, negotiate for months, then sign a services agreement in June containing its own confidentiality clause and a standard entire-agreement clause stating that the new contract supersedes all prior agreements on the subject matter.

The result can be that your carefully negotiated NDA is extinguished and replaced by a weaker clause with a shorter survival period. If you want the NDA to keep running, say so explicitly.

Add a carve-out to the entire-agreement clause: "except for the Mutual Non-Disclosure Agreement dated [date], which remains in full force and effect and continues to govern information disclosed under it."

Alternatively, state that the confidentiality clause in the new contract governs everything, including information exchanged earlier — but only after checking that its term and remedies are at least as strong.

Use an NDA when there is no other contract yet, when the discussion may not lead anywhere, or when you want confidentiality obligations that clearly survive independently of any deal.

Use a confidentiality clause when there is already a contract governing the relationship and the information flows from that work. Use both when discussions start before the deal — just make sure they are reconciled when the deal is signed.