The 10 NDA Clauses to Check Before You Sign
A plain-English checklist of the clauses that decide how much an NDA actually restricts you, and which ones quietly go too far.
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- 1
Overbroad Definition of "Confidential Information"
HIGH RISKThe definition is so wide it covers almost anything you learn, including things you already knew or that are public.
What to do: Narrow it to information actually marked or identified as confidential, and add the standard exclusions below.
- 2
Missing Standard Exclusions
HIGH RISKA fair NDA excludes information that is public, already known to you, independently developed, or received lawfully from a third party. This one leaves them out.
What to do: Insist on all four standard carve-outs, plus disclosure required by law.
- 3
Perpetual Duration
HIGH RISKThe confidentiality obligation never ends. US courts often refuse to enforce indefinite NDAs, but you still carry the risk.
What to do: Set a defined term, commonly 2–5 years for ordinary business information (trade secrets can run longer).
- 4
Residuals Clause, "Unaided Memory"
HIGH RISKA residuals clause lets the other side freely use anything they "retain in unaided memory", which can gut the whole agreement.
What to do: Strike it, or at minimum exclude trade secrets and anything documented as confidential.
- 5
No Return or Destruction Obligation
MEDIUM RISKWhen the deal ends, there is no requirement to return or destroy your confidential materials, they can just keep everything.
What to do: Add a clause requiring prompt return or certified destruction on request or termination.
- 6
One-Way When It Should Be Mutual
MEDIUM RISKOnly you are bound to keep secrets, even though both sides are sharing sensitive information.
What to do: If you are also disclosing anything, ask to make it a mutual NDA.
- 7
Injunctive Relief With No Bond
MEDIUM RISKThe other side can get a court order against you instantly and without posting a bond, even before proving harm.
What to do: Ask that any injunction follow normal legal standards, including a bond requirement.
- 8
A Non-Compete Hidden Inside the NDA
HIGH RISKThe "NDA" quietly includes non-compete or non-solicitation restrictions that have nothing to do with confidentiality.
What to do: Flag and remove them, a confidentiality agreement should not restrict who you can work for.
- 9
Governing Law and Venue in Their Home State
MEDIUM RISKAny dispute must be handled in a distant state chosen by the other side, raising your cost to defend yourself.
What to do: Negotiate a neutral or your-own-state venue, or remote proceedings.
- 10
Assignment, They Can Transfer It, You Cannot
MEDIUM RISKThe other side can assign the NDA to anyone (including a competitor or acquirer) while you stay bound, but you cannot.
What to do: Make assignment mutual, or require your consent before the agreement is transferred.
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