A Non-Disclosure Agreement (NDA) seems straightforward: you agree not to share confidential information. Sign it and move on, right?
Not so fast.
NDAs are one of the most frequently misused contract types. Buried inside standard-looking language are clauses that can:
This guide gives you a practical NDA review checklist — 8 specific red flags to look for before you sign.
Skip the checklist and review your NDA with AI →
An NDA (also called a Confidentiality Agreement) is a contract where one or both parties agree to keep certain information secret. You'll encounter NDAs when:
NDAs come in two forms:
The definition section is the most important part of any NDA. A fair definition covers specific categories of information (trade secrets, customer lists, financial data, technical specifications). A dangerous definition covers everything.
Watch out for: "Confidential information means all information disclosed by [Company], in any form, whether or not marked as confidential."
This can make even publicly available information "confidential" in the context of your engagement — creating liability for things you couldn't reasonably know were secret.
Fair language: Confidential information should be limited to information that is (a) marked as confidential, or (b) disclosed verbally and confirmed in writing within 30 days.
A fair NDA always includes carve-outs: exceptions for information that is (a) already publicly known, (b) independently developed by you, (c) disclosed to you by a third party without restriction, or (d) required to be disclosed by law.
Without these carve-outs, you could theoretically be liable for disclosing information that's already published on the company's website.
Some NDAs say the confidentiality obligation "shall survive indefinitely" or "shall survive for the life of the receiving party." This is unreasonable for most business contexts.
Fair terms:
If an NDA requires you to protect non-trade-secret information forever, push back.
Some NDAs — especially employment NDAs — include non-solicitation or non-compete language bundled in. These need geographic and scope limitations.
A non-compete buried in an NDA that says you cannot "engage in any business competitive with [Company] anywhere in the world for 3 years" is legally questionable and practically devastating.
Most NDAs include an "injunctive relief" clause: the other party can seek a court order to stop you from taking certain actions. That's standard.
Red flag: If the clause allows them to seek injunctive relief ex parte (without notifying you first), they can get a court order restraining your actions before you even know there's a lawsuit.
Fair language: "The parties agree that irreparable harm may result from a breach and that injunctive relief is an appropriate remedy, provided that the disclosing party provides reasonable notice before seeking such relief."
NDAs typically require you to return or destroy confidential information when the agreement ends. This is standard.
Red flag: If the clause requires you to certify in writing that all confidential information has been destroyed — including from backup systems — you may be making a legally binding representation that's impossible to fulfill completely.
A "mutual" NDA sounds balanced. But check the definitions: sometimes the disclosing party's definition of confidential information is extremely broad, while yours is narrow. Or the obligations are the same on paper but the information each side is actually sharing is vastly asymmetrical.
Read mutual NDAs carefully: if one side is a Fortune 500 company and the other is you, "mutual" obligations may not be practically mutual.
If you accidentally disclose confidential information — say, you mention a client's name in a conference presentation — what's your liability?
Without a damages cap, you could theoretically be liable for the company's total lost profits related to that disclosure. These can be enormous.
Fair language: "Each party's liability for breach of this Agreement shall be limited to direct damages not to exceed [dollar amount or reasonable cap]."
Step 1: Read the definitions. What exactly counts as "confidential information"? Is it too broad?
Step 2: Check the duration. How long do your obligations last? Is there a survival clause?
Step 3: Find the carve-outs. Are there exceptions for public information, independent development, and legal disclosure requirements?
Step 4: Look for hidden non-compete language. Is this actually an NDA combined with a non-compete or non-solicitation agreement?
Step 5: Check the remedies clause. Can they seek injunctive relief without notice?
Step 6: Upload to AI for a full review. AI catches things manual review misses, especially in long or densely written NDAs.
If you need to create an NDA (rather than review one you received), download our free template:
Our NDA template includes:
| Scenario | Use AI | Use a Lawyer | |----------|--------|--------------| | Standard vendor/contractor NDA | ✅ | | | Employment NDA before a new job | ✅ | | | NDA for a partnership or M&A discussion | ✅ Start here | ✅ Confirm key terms | | NDA with injunctive relief and broad scope | ✅ Flag issues | ✅ Negotiate terms | | High-stakes IP disclosure ($100K+) | | ✅ |
Yes, you can always negotiate or decline. For standard vendor and employment NDAs, most companies expect some negotiation. For routine NDAs before a job interview or vendor engagement, refusal is unusual but not unheard of.
Liability depends on the specific language. With unlimited damages clauses, accidental breaches can result in significant liability. With capped damages and limited scope, the impact is more manageable. This is why reviewing before signing matters.
Yes. Length doesn't determine enforceability. A simple, clearly worded one-page NDA can be fully enforceable in most jurisdictions.
Under 60 seconds for most NDAs. You'll receive a full risk report identifying each clause, its risk level, and specific recommendations.
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Need to create an NDA instead? Download our free NDA template →