NDA Red-Flag Checklist

Clauses to check

1. Overbroad definition of confidential information

   A fair NDA defines confidential information as specific, marked, or genuinely non-public material. Watch for definitions so broad that they cover everything you receive, including things that are already public or that you already knew. The wider the definition, the easier it is to breach by accident.

   Ask for: Ask to limit 'confidential information' to material that is marked confidential or clearly non-public, with the standard carve-outs included.

2. Indefinite or very long terms

   Some NDAs bind you forever, or for ten years or more. For most business information a term of two to five years is more typical, with genuine trade secrets sometimes lasting longer. An indefinite duty to police information is hard to live with and rarely necessary.

   Ask for: Ask for a defined term, often two to five years, after which the confidentiality duty ends, except for true trade secrets.

3. One-way obligations

   A mutual NDA protects both sides equally. A one-way (unilateral) NDA binds only you while the other party shares freely and carries no duty back. If you are also disclosing anything sensitive, a one-way agreement leaves you exposed.

   Ask for: If information flows both ways, ask to make the NDA mutual so the same duties apply to both parties.

4. Hidden non-compete or non-solicit language

   NDAs sometimes carry clauses that have nothing to do with confidentiality: a promise not to work with certain people, not to compete, or not to solicit clients and staff. These can restrict your business far beyond keeping a secret.

   Ask for: Ask to strike any non-compete or non-solicit language, or to negotiate it separately and knowingly rather than buried in a confidentiality document.

5. Ownership and 'residuals' traps

   Look for clauses that claim ownership of ideas or feedback you give, or that restrict the residual knowledge in your head. Overreaching IP or assignment language inside an NDA can quietly transfer rights you never meant to give up.

   Ask for: Ask that the NDA covers confidentiality only, that no IP or licence is granted by disclosure, and that ordinary skills and experience you retain are explicitly excluded.

6. Punitive remedies and wide injunction rights

   Some NDAs add penalty clauses, agreed liquidated damages, or sweeping rights to injunctions and legal-fee recovery against you. These raise the stakes of even a technical breach far above the actual harm.

   Ask for: Ask to tie remedies to actual proven loss, and to make any fee-shifting mutual rather than one-directional.

Quick pre-signing checklist

• 'Confidential information' is specifically defined, not everything
• The standard carve-outs (public, known, independent, legal) are present
• The term has a clear end date, not 'indefinite'
• It is mutual if information flows both ways
• There is no hidden non-compete or non-solicit
• No IP or licence is transferred just by disclosure
• Remedies are tied to actual loss, not open-ended penalties
• You know who you are signing with and in what capacity