Non-Disclosure Agreements (NDAs) are a common part of doing business, whether you’re working with a new client, a partnership, or sharing early-stage ideas. Because they’re so common, NDAs are often signed quickly and without much scrutiny.
Even a short NDA can contain obligations that last for years or restrict how you operate your business. Below are five practical tips to help you review an NDA more carefully and avoid common pitfalls.
- Check the Length of Time
One of the first things to review in an NDA is how long the confidentiality obligations last.
- Does the time period run from the date the agreement is signed
- Does it run from the date the confidential information is first disclosed?
- Does it continue even after the agreement is terminated?
Some NDAs impose obligations for a fixed period (for example, two or five years), while others apply indefinitely. Open-ended confidentiality obligations are unusual and may be less enforceable, particularly if the information may become outdated or public over time. Make sure the timeframe is reasonable and clearly defined.
- Understand Storage and Security Obligations
NDAs might be more specific than a general obligation to keep things confidential, often including certain storage and security requirements.
Look out for clauses that require:
- Information to be stored only electronically, or even only in paper form
- Use of specific security measures, encryption, or access controls
- Restrictions on cloud storage, remote access, or third-party platforms
- Restrictions within your business that affect your usual working patterns.
If the NDA specifies security obligations you cannot meet, you may be setting yourself up for an unintentional breach. Ensure the requirements align with how you actually work.
- Be Clear on What Counts as “Confidential”
Not all confidential information is always included – a well-drafted NDA should clearly define what information is covered by the document.
Check whether confidentiality applies to:
- Only client or commercial information
- Technical specifications, software, or trade secrets
- Information disclosed verbally as well as in writing
Also look for exclusions. Common exceptions include information that is already public, developed independently, or obtained from a third party. Vague or overly broad definitions of “confidential information” can make an agreement difficult to adhere to.
- Is the NDA Mutual or One-Way?
NDAs can be mutual (both parties have confidentiality obligations) or one-way (only one party does).
Even if information is being shared both ways, an NDA may still be drafted in favour of one party only. This is particularly common where one party has drafted the NDA or has more bargaining power.
Ask yourself:
- Are you also disclosing confidential information?
- If so, are you equally protected?
If confidentiality obligations are one-sided, consider whether that imbalance is justified in the context of the relationship.
- Review How You Can Use and Share the Information
Finally, pay close attention to how the confidential information can be used and who it can be shared with.
Key questions include:
- Is use limited strictly to a specific project or purpose?
- Can you share the information with employees, contractors, or sub-contractors?
- Are there conditions, such as a need-to-know basis or written consent?
- Review the document as a whole
There may also be related clauses that may not be entirely related to confidentiality, such as:
- Termination provisions – how the agreement can be terminated and what happens to information when the agreement ends
- Hidden obligations like non-solicitation or non-circumvention clauses
These additional restrictions can significantly affect your business, even though they are not strictly about confidentiality.
NDAs may appear simple, but the detail matters. Taking the time to review them carefully can save you from unexpected legal consequences later. Certain NDAs include for not just damages but additional legal retribution.
When in doubt, it’s worth seeking legal advice, especially if the NDA includes long-term commitments. A few minutes of careful review now can prevent much bigger issues down the line.
Next Steps?
If you need any more help with a legal contract, speak to BEB. We can write a bespoke business contract to suit your exact needs.
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