An NDA is a promise to keep something secret. Everything in the document answers three questions: what secret, for how long, and what happens if you break the promise. Read it with those three questions in front of you.
First: mutual or one-way?
A one-way NDA protects one side. A mutual NDA protects both. If the conversation is genuinely two-way, ask for mutual. A one-way NDA in a two-way conversation puts all the risk on you and gives the other side no reason to be careful with your information.
The 8 clauses that matter
1. Definition of "Confidential Information"
Good: specific (financials, customer lists, source code). Bad: vague catch-all like "any information disclosed, in any form."
"Any and all information" with no marking requirement. Ask for marking: written info labeled confidential, oral info identified as confidential and confirmed in writing within 30 days.
2. Exclusions from confidentiality
Every fair NDA excludes four categories. If any are missing, add them:
- Already public.
- Already known to you before disclosure.
- Received from a third party free to share it.
- Independently developed without using the confidential information.
3. Permitted use
Should be limited to a specific purpose ("to evaluate a potential business relationship"). "Any business purpose" is effectively a free license to your data.
4. Duration
Two to five years is standard for business conversations. Perpetual is a red flag unless a real trade secret is involved.
5. Return or destruction
Fair: return or destroy within 30 days of written request, certified in writing. Watch for open-ended "keep for legal or compliance purposes" carveouts.
6. Remedies for breach
Money damages plus injunction is standard. Liquidated damages (a fixed penalty like "$50,000 per violation") are unusual and heavily favor the discloser.
7. Governing law and venue
Whoever picks the state picks the home court. Push for your home state or a neutral one like Delaware, not theirs.
8. What's NOT supposed to be in an NDA
An NDA should be an NDA. If any of these are hidden inside, treat them as separate negotiations.
The 60-second checklist
- Mutual or one-way? Should it be mutual here?
- "Confidential Information" defined specifically, or vague?
- All four standard exclusions present?
- Permitted use limited to a specific purpose?
- Total duration 2 to 5 years, or longer?
- Clear return-or-destroy path when the deal ends?
- Any non-compete, non-solicit, IP assignment, residuals, or liquidated damages hidden inside?
- Governing state acceptable to you?
All eight clean, sign it. Any one off, ask for a redline.
Upload the NDA, get a clause-by-clause plain-English read in about an hour with the risks flagged. $1 to try. Not legal advice: a structured second opinion before you sign or take it to a lawyer.