NDA Guide for Korea: How to Draft a Confidentiality Agreement Under Korean Law

When entering a business partnership, raising capital, or outsourcing development in South Korea, one of the first documents exchanged is typically an NDA — a Non-Disclosure Agreement, known locally as 비밀유지계약서 (bimil-yuji-gyeyakseo).

Yet many parties sign NDAs that are either overly broad, missing critical clauses, or poorly adapted to Korean legal practice. This guide walks you through drafting an enforceable NDA under Korean law.

What Is an NDA Under Korean Law?

An NDA is a legally binding contract in which one or both parties agree not to disclose or misuse confidential information shared during a business relationship.

In Korea, NDAs are governed by the principle of freedom of contract under the Korean Civil Code (민법). There is no specific statute dedicated to NDAs, but they are fully enforceable as private contracts. Violations can result in civil damages and, in cases involving trade secrets, criminal penalties under the Unfair Competition Prevention Act.

Common Situations Requiring an NDA

Situation	Protected Information
Startup investment meetings	Business plans, financials, technology
M&A due diligence	Financial statements, customer data
Outsourcing & development	Source code, designs, specifications
Employment & onboarding	Internal systems, client databases
Joint R&D projects	Research data, pre-patent technology

Types of NDAs

1. Unilateral NDA (단방향)

One party discloses information; only the receiving party has confidentiality obligations.

• Example: A startup sharing its business plan with potential investors
• Best for: Situations where information flows in one direction

2. Mutual NDA (쌍방향)

Both parties exchange confidential information and assume equal obligations.

• Example: Two companies exploring a joint venture or technology partnership
• Most common in practice for B2B negotiations in Korea

5 Essential NDA Clauses

1. Definition of Confidential Information (비밀정보 정의)

This is the most critical clause. It must clearly define what is protected.

Weak example: "All information shared shall be confidential." Strong example: "Confidential Information means all technical, financial, commercial, and operational data disclosed in written, oral, or electronic form, including but not limited to business plans, customer lists, source code, and financial projections."

Also specify exclusions:

• Publicly known information
• Independently developed information
• Information lawfully received from third parties

2. Permitted Use (사용 범위)

Restrict how the receiving party may use the confidential information.

Example: "The Receiving Party shall use the Confidential Information solely for the purpose of evaluating the proposed [Project Name] and for no other purpose."

3. Duration of Confidentiality (비밀유지 기간)

Distinguish between the NDA term (e.g., 1–3 years) and the survival period of the confidentiality obligation (e.g., 2–5 years after termination). For trade secrets, many Korean NDAs specify "until the information becomes public" — essentially indefinite.

4. Remedies for Breach (위반 시 손해배상)

Korean courts generally enforce contractual penalty clauses (위약금). Your NDA should cover:

• Liquidated damages: Pre-agreed penalty amount
• Actual damages: Compensation for provable losses
• Injunctive relief: Court orders to stop unauthorized use or disclosure

5. Return Obligation (반환 의무)

Upon termination, all materials containing confidential information — documents, files, copies, backups — must be returned or destroyed, with written certification.

Korea Fair Trade Commission NDA Guidelines

Korea's Fair Trade Commission (공정거래위원회) publishes standard NDA guidelines, particularly for transactions between large enterprises and SMEs. These guidelines recommend:

• Defining confidential information narrowly and specifically
• Avoiding one-sided or coercive terms
• Setting reasonable time limits
• Providing balanced remedies for both parties

Following these guidelines helps ensure your NDA is not only enforceable but also fair.

Legal Enforcement of NDAs in Korea

Civil Remedies

1. Damages lawsuit: Compensation for actual financial losses
2. Preliminary injunction (가처분): Court order to immediately stop disclosure
3. Contractual penalties: Enforcement of pre-agreed penalty clauses

Criminal Liability

If the NDA breach constitutes a trade secret violation under the Unfair Competition Prevention Act:

• Up to 10 years imprisonment or 500 million KRW fine
• Enhanced penalties for overseas leakage

Common NDA Drafting Mistakes

Mistake	Solution
Overly broad definition	Narrow the scope to specific categories
No time limit specified	Set both term and survival period
Oral disclosures excluded	Add "including oral communications"
No return procedure	Specify return/destruction method and deadline
Missing dispute resolution	Add jurisdiction clause or arbitration provision

Sharing NDA Drafts Securely

After drafting an NDA, you often need to share it with legal counsel or a counterparty for review. Sending it through regular email or Messenger creates exposure risk.

LOCK.PUB lets you share NDA drafts and confidential business information through password-protected encrypted memos. Only someone with the password can access the content — far more secure than sending attachments over iMessage or email.

NDA Checklist

Before signing, verify your NDA includes:

• Specific definition of confidential information
• Clear exclusions from confidential information
• Limited permitted use
• Reasonable confidentiality duration
• Breach remedies (damages, injunction, penalties)
• Return and destruction obligations
• Dispute resolution mechanism (jurisdiction or arbitration)
• Signatures and dates from all parties

Conclusion

An NDA is not just a formality — it is the first line of defense for confidential business information in Korean business dealings. While Korean Civil Code grants broad freedom of contract, failing to include the five essential clauses can leave your information unprotected.

When you need to share NDA drafts or sensitive business documents securely, try LOCK.PUB to create password-protected memos. It is a safer alternative to pasting confidential terms into chat messages.