What to Look For Before Signing an NDA
NDAs are so common that people often sign without reading. Use this checklist to ensure you're not agreeing to unfair terms.
Basic Information Checklist
- ☐ Parties identified correctly (you and the company)
- ☐ Purpose stated—why are you receiving confidential info?
- ☐ One-way or mutual—are both parties sharing info?
- ☐ Effective date is clear
Definition of Confidential Information
- ☐ Definition is specific, not "any and all information"
- ☐ Marking requirements—written info must be marked confidential
- ☐ Oral disclosure process—how is verbal info confirmed?
- ☐ Categories listed if possible (technical, financial, etc.)
Standard Exclusions Present
- ☐ Information already publicly available
- ☐ Information you already knew before receiving it
- ☐ Information received from third parties legally
- ☐ Information independently developed by you
- ☐ Information required by law to disclose
Obligations Checklist
- ☐ Use restrictions are reasonable (not overly broad)
- ☐ No hidden non-compete language
- ☐ Permitted disclosures to attorneys, accountants
- ☐ Security requirements are achievable
Duration Checklist
- ☐ Term of agreement is specified
- ☐ Confidentiality duration is reasonable (2-5 years typical)
- ☐ Trade secrets exception—perpetual protection is fair for true trade secrets
- ☐ Not perpetual for all information
Return/Destruction Requirements
- ☐ Reasonable timeline for return/destruction
- ☐ Exception for archival copies required by law
- ☐ Exception for attorney files
- ☐ Certification process is clear
Liability and Remedies
- ☐ Liability cap exists
- ☐ Injunctive relief terms are fair
- ☐ Attorney's fees provision is mutual
- ☐ Indemnification is mutual or absent
Legal Terms
- ☐ Governing law is reasonable
- ☐ Dispute resolution location is acceptable
- ☐ Assignment restrictions—can they transfer the NDA?
- ☐ Modification requirements—changes need mutual consent
Red Flags to Watch For
- ☐ NOT present: Perpetual confidentiality for general info
- ☐ NOT present: Missing standard exclusions
- ☐ NOT present: Hidden non-compete provisions
- ☐ NOT present: Impossible return/destruction requirements
- ☐ NOT present: One-sided indemnification
Frequently Asked Questions
How long should I have to keep information confidential?
For general business information, 2-5 years is standard. Trade secrets may require perpetual protection, which is reasonable. Be cautious of NDAs requiring perpetual confidentiality for all types of information.
What if the NDA is missing standard exclusions?
Request that standard exclusions be added for public information, prior knowledge, independent development, and information from third parties. Without these, you could be liable for information that isn't actually secret.
Can I negotiate an NDA?
Yes. Common negotiation points include narrowing the definition of confidential information, adding exclusions, limiting duration, and capping liability. Companies may resist changes, but it's always worth asking.
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