NDA

How to review a non-disclosure agreement (NDA)

Check four things first in an NDA: how broadly confidential information is defined, what is excluded from it, how long the obligations last, and whether the duties are mutual. Most problems come from an overbroad definition, no standard exclusions and an unlimited term.

Review your contractUpdated October 16, 2026

Legal background

  • Contract law of the chosen governing law (common law or civil law)
  • Trade-secret rules (for example EU Directive 2016/943, US DTSA)
  • Data-protection law where personal data is shared (GDPR, UK GDPR)

Main risks

  1. 01Everything is “confidential”

    The definition covers any information “in any form”, including public data or information you already knew, and there are no carve-outs.

  2. 02No standard exclusions

    Missing exclusions for information that is public, already known, independently developed or lawfully received from a third party.

  3. 03Perpetual obligations

    No end date. Market practice is a fixed term (often 2 to 5 years after disclosure or termination), with longer protection only for true trade secrets.

  4. 04One-way when the exchange is two-way

    Only one party is bound although both share information, or remedies such as injunctive relief apply to one side only.

  5. 05Broad non-use and “residuals” traps

    A ban on using any knowledge gained blocks ordinary business, while a missing residuals clause leaves the recipient exposed to claims about general know-how.

  6. 06Uncapped liability and unfair venue

    Liquidated damages without relation to harm, unlimited liability, and exclusive jurisdiction far from you.

Example finding and redline

Clause in the contract

“Confidential Information means any information disclosed by the Disclosing Party in any form.”

Why it is risky

No exclusions and no reasonable-person test, so public information can be claimed as confidential.

Suggested fix

Limit to information marked confidential or that a reasonable person would understand to be confidential, and add exclusions for public, previously known, independently developed or lawfully received information.

Pre-signing checklist

  • Definition of confidential information is specific and marked or reasonably identifiable
  • Standard exclusions are present
  • Duties are mutual if both sides disclose
  • Term of the agreement and survival period are defined
  • Permitted disclosures: employees, advisers, legal compulsion
  • Return or destruction of materials on request or at the end
  • Remedies, liability cap, governing law and venue are acceptable

FAQ

How long should an NDA last?
Commonly the agreement runs for one to three years, and confidentiality survives for two to five years afterwards. Trade secrets are often protected for as long as they remain secret.
Should an NDA be mutual or one-way?
If both sides will share sensitive information, make it mutual. A one-way NDA is fine when only one party discloses, but check that you are not the party taking on all the obligations without receiving anything.
Can AI review an NDA reliably?
AI is good for a fast first pass: it finds missing exclusions, open-ended terms and one-sided remedies. It does not replace a lawyer for high-stakes or cross-border deals.

This material is for general information and is not legal advice. Rules differ by jurisdiction; have a lawyer review any significant contract before you sign.