Someone hands you a non-disclosure agreement and asks you to sign. Maybe it is a potential business partner, a new client, or a company you are interviewing with. The document looks standard — a few pages of legal language — and the temptation is to sign quickly and move on.
That is how people end up bound by terms they never intended to agree to.
This checklist walks through the 10 things you should review before signing any NDA. Whether you are a freelancer, founder, or employee, these checks take five minutes and can save you from months of legal headaches.
1. Is It Mutual or One-Way?
The first thing to check is whether the NDA protects both parties or just one.
A one-way NDA means only the disclosing party's information is protected. You are bound to secrecy, but they have no obligation to protect anything you share with them.
A mutual NDA protects both sides equally.
What to do: If you plan to share any proprietary information — your processes, pricing, client lists, or ideas — insist on a mutual NDA. One-way NDAs are appropriate only when information flows in a single direction, such as when evaluating a potential acquisition.
2. How Is "Confidential Information" Defined?
This is where most problems hide. An overly broad definition can cover virtually everything — conversations, general industry knowledge, or information you already knew.
Red flags to watch for:
- "All information disclosed in any form" with no limitations
- No exclusion for publicly available information
- No exclusion for information you independently developed
- No exclusion for information received from a third party
What to do: Make sure the definition includes standard carve-outs. Confidential information should not include anything that is already public, was known to you before the NDA, was independently developed by you, or was lawfully received from someone else.
3. What Are the Duration and Survival Terms?
Every NDA should have a clear time limit on your confidentiality obligation. Some NDAs specify a term for the relationship (say, two years) but then include a survival clause extending your obligations indefinitely.
What to do: Look for two separate timeframes — the term of the agreement and the survival period after termination. A two- to three-year survival period is standard for most business information. Indefinite obligations should be reserved for genuine trade secrets.
4. Are There Hidden Non-Compete or Non-Solicit Clauses?
Some NDAs include clauses that go beyond confidentiality. Non-compete provisions restrict who you can work with. Non-solicitation clauses prevent you from hiring or doing business with the other party's employees or clients.
What to do: Read every clause, not just the sections labeled "Confidentiality." If you find restrictive covenants, evaluate whether they are reasonable in scope, geography, and duration. In many states, overly broad non-competes are unenforceable, but fighting them in court is expensive.
5. What Happens If You Accidentally Breach?
NDAs typically define remedies for breach — what the disclosing party can do if you violate the agreement. Some NDAs include liquidated damages clauses specifying a fixed penalty amount. Others claim the right to injunctive relief, allowing them to get a court order without proving actual damages.
What to do: Check whether the remedies are proportional. A penalty of $100,000 for an accidental disclosure of non-critical business information is unreasonable. Look for language requiring the disclosing party to prove actual damages rather than allowing arbitrary penalties.
6. Can You Discuss the Existence of the NDA?
Some NDAs prohibit you from telling anyone that the NDA itself exists. This means you cannot mention to a colleague, advisor, or attorney that you are bound by this agreement.
What to do: Make sure you can discuss the NDA with your legal counsel and business advisors. If the agreement prohibits even acknowledging its existence, push back — this level of secrecy is rarely justified outside of mergers and acquisitions.
7. Which Jurisdiction Governs the Agreement?
The governing law clause determines which state or country's laws apply if there is a dispute. This matters because NDA enforcement varies significantly by jurisdiction.
What to do: Check that the governing law is reasonable. If you are based in Texas and the NDA specifies Delaware law, understand what that means for enforcement. Ideally, the governing law should be the jurisdiction where you operate or a neutral, well-established commercial jurisdiction.
8. How Can You Terminate the NDA?
Not all NDAs include a termination provision. Without one, you may be bound by the agreement until it expires naturally, even if the business relationship ends.
What to do: Look for a termination clause that allows either party to end the agreement with written notice — typically 30 days. Confirm that your confidentiality obligations have a defined survival period after termination rather than continuing indefinitely.
9. Does the NDA Cover Return or Destruction of Materials?
When the NDA ends, what happens to the confidential information you received? A good NDA specifies that you must return or destroy all materials containing confidential information.
What to do: Check whether the return-of-materials clause is practical. Can you certify destruction of digital copies across all your systems? If the requirement is unrealistic, negotiate a reasonable standard — for example, commercially reasonable efforts to delete materials from active systems.
10. Are There Any Obligations Beyond Confidentiality?
Read the entire document. NDAs sometimes include provisions that have nothing to do with confidentiality:
- Assignment clauses transferring your intellectual property
- Indemnification clauses making you financially responsible for the other party's losses
- Arbitration clauses waiving your right to go to court
- Fee-shifting clauses making you pay the other party's legal fees if they sue you
What to do: Flag anything that goes beyond the core purpose of protecting confidential information. These additional obligations deserve their own negotiation and should not be buried in a "standard" NDA.
Quick-Reference Checklist
Use this summary before signing any NDA:
| # | Check | Pass? | |---|-------|-------| | 1 | Mutual or one-way — appropriate for the relationship | | | 2 | "Confidential information" has clear, reasonable boundaries | | | 3 | Duration and survival terms are time-limited | | | 4 | No hidden non-compete or non-solicit clauses | | | 5 | Breach remedies are proportional | | | 6 | You can discuss the NDA with advisors | | | 7 | Governing jurisdiction is reasonable | | | 8 | Termination provision exists | | | 9 | Return/destruction of materials is practical | | | 10 | No obligations beyond confidentiality buried in the document | |
When to Walk Away
Not every NDA is worth signing. Consider declining if:
- The other party refuses to negotiate any terms
- The definition of confidential information is so broad it covers public knowledge
- There are hidden non-compete provisions with no geographic or time limits
- The penalties for breach are disproportionate to the value of the relationship
- The NDA is one-way when the relationship clearly involves mutual information sharing
An NDA is supposed to create trust. If the terms feel one-sided before the relationship starts, that imbalance is unlikely to improve.
Create Your Own NDA
Instead of signing someone else's one-sided NDA, consider drafting your own. When you control the document, you set the terms.
Create a professionally drafted NDA on contract.diy — jurisdiction-aware, with balanced mutual protections built in. Or browse all contract types to find what you need.