NDA

What to Look for in an NDA Before You Sign

February 25, 2026 · 8 min read

Non-disclosure agreements (NDAs) are among the most common legal documents you'll encounter in business. Whether you're a freelancer, startup founder, or employee, understanding what's in an NDA before you sign can save you from serious problems down the road.

Many people sign NDAs without reading them carefully, assuming they're all the same. They're not. Some NDAs are balanced and fair; others contain clauses that can restrict your career, expose you to liability, or give the other party far more control than you realize.

Here's what to look for before you sign.

1. Definition of Confidential Information

This is the most important section. It defines what is actually being kept confidential. Watch out for:

• Overly broad definitions — phrases like "all information disclosed, whether oral or written, tangible or intangible" can mean almost anything. This makes it nearly impossible to know what you can and can't discuss.
• No carve-outs — a good NDA should exclude information that is already publicly known, independently developed by you, or received from a third party without obligation.
• Vague language — if the definition is unclear, you may find yourself unable to use general knowledge you gained during the relationship.

What to look for: A specific, clearly bounded definition with standard exclusions.

2. Duration and Term

NDAs aren't meant to last forever — but some try to. Key considerations:

• Agreement duration — how long must you keep the information confidential? One to three years is typical. Five years is common for sensitive technical information. "Perpetual" or "indefinite" terms should raise a red flag.
• Survival clauses — some NDAs include obligations that survive the termination of the agreement. Check how long these post-termination obligations last.

What to look for: A reasonable time period (1-5 years) that matches the sensitivity of the information.

3. One-Way vs. Mutual

NDAs can be one-way (only one party is bound) or mutual (both parties are bound). If you're sharing information too, you should insist on a mutual NDA.

• One-way NDAs are common when one party is clearly the discloser (e.g., a company sharing trade secrets with a contractor). But if the relationship is more balanced, a one-way NDA unfairly shifts risk onto you.
• Mutual NDAs protect both parties equally and are standard for business partnerships, joint ventures, and most B2B relationships.

What to look for: A mutual NDA whenever you're also sharing sensitive information.

4. Permitted Disclosures

Can you share the confidential information with your lawyer? Your accountant? Your employees? A well-drafted NDA should address this clearly.

• Legal advisors — you should always be permitted to share with your attorney or financial advisor under their own professional obligations.
• Employees and contractors — if you're running a business, you'll likely need to share some information with your team. The NDA should allow this, typically requiring those individuals to be bound by similar obligations.
• Court orders and legal requirements — a good NDA includes a carve-out for legally compelled disclosures, ideally with a notice requirement so the disclosing party can seek a protective order.

What to look for: Clear permission to share with advisors and team members, plus a legal compulsion carve-out.

5. Non-Compete and Non-Solicitation Clauses

Some NDAs sneak in restrictions that go far beyond confidentiality:

• Non-compete clauses — these can prevent you from working in your industry for a specified period. They don't belong in a standard NDA and should be negotiated separately if included.
• Non-solicitation clauses — these prevent you from hiring or doing business with the other party's employees or customers. While sometimes reasonable, they can be overly restrictive.
• Non-circumvention clauses — these prevent you from going around the other party to deal directly with their contacts. Check the scope carefully.

What to look for: These clauses should be absent from a standard NDA or clearly reasonable in scope and duration.

6. Remedies and Penalties

What happens if someone breaches the NDA? This section matters more than you think:

• Injunctive relief — most NDAs state that the disclosing party can seek an injunction (court order to stop the breach). This is standard and reasonable.
• Liquidated damages — some NDAs specify a fixed penalty per breach. Watch for unreasonably high amounts that could be financially devastating.
• Indemnification — broad indemnification clauses can make you responsible for all damages, legal fees, and losses related to a breach, even indirect ones.

What to look for: Remedies proportional to the potential harm, without excessive penalties.

7. Return or Destruction of Information

When the NDA ends, what happens to the confidential information you received?

• Return obligations — you may be required to return all documents, files, and copies. Consider whether this is practical (e.g., information in backup systems).
• Destruction requirements — some NDAs require you to certify in writing that all copies have been destroyed. Make sure this aligns with your own data retention policies and legal requirements.

What to look for: Practical requirements that account for electronic backups and regulatory retention needs.

8. Governing Law and Dispute Resolution

Don't overlook the fine print at the end:

• Governing law — the NDA will specify which jurisdiction's laws apply. If it's a foreign jurisdiction, this can significantly affect your rights and the cost of enforcement.
• Dispute resolution — some NDAs require arbitration instead of court proceedings. While arbitration can be faster, it may also be more expensive and less transparent.

What to look for: A governing law that is familiar and accessible to you, with reasonable dispute resolution procedures.

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Quick Red Flag Checklist

Before signing any NDA, check for these common red flags:

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