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Educational guide

10 NDA Red Flags to Watch Out For

Most NDAs are reasonable. The unreasonable ones tend to share these patterns — read this before you sign one.

At a glance

The six NDA red flags people miss most

Six NDA red flags people miss mostDiagram: six NDA red flags people miss most — indefinite duration, broad confidential definition, missing standard exclusions, one-way obligations, liquidated damages, hidden non-solicit.Six NDA red flags people miss mostA short version of the ten below — the unfair patterns that recurIndefinite durationConfidentiality foreverBroad 'confidential' definitionCatches every chatMissing standard exclusionsNo public/prior carve-outsOne-way obligationsOnly you owe dutiesLiquidated damagesFixed-dollar penalty per breachHidden non-solicitBuried in obligationsFreeContractReviewer.com

NDAs are usually fine. The dangerous ones quietly do four things: define confidentiality so broadly it covers everything, run forever, shift remedies in one direction, and bury non-competes or non-solicits inside the obligations section. Here are the ten most common patterns. Run your NDA through our free NDA reviewer to see if any of them apply to yours.

  1. 1

    Indefinite duration

    An NDA without an end date binds you forever. 2–5 years is typical, with separate carve-outs for trade secrets.

  2. 2

    Everything is 'confidential' by default

    If the definition catches every casual conversation, you can't function. Look for a 'reasonably understood' or 'marked confidential' standard.

  3. 3

    Missing standard exclusions

    Public information, prior knowledge, independently developed material, and information from a third party should all be excluded.

  4. 4

    One-way obligations

    If both parties may share confidential information, both should owe the same duties. A 'mutual' NDA is often a one-line change.

  5. 5

    Broad indemnification

    Open-ended indemnification on top of damages and injunctive relief is overreaching. Look for caps and mutual obligations.

  6. 6

    Liquidated damages

    Fixed-dollar penalties for breach can dwarf actual damages. Many courts won't enforce them, but they can intimidate. Push back.

  7. 7

    Implied non-solicit and non-compete

    Some NDAs sneak in non-solicit or non-compete language. Read the obligations section carefully.

  8. 8

    Free assignment by the disclosing party

    If they can assign the NDA to anyone, you may be bound to a competitor or acquirer you never agreed to deal with.

  9. 9

    Forum and law of an unfamiliar jurisdiction

    If a small dispute requires litigation in a state across the country, the cost-of-fight calculation changes. Push for neutral or local venue.

  10. 10

    Survival of all clauses, not just confidentiality

    After termination, only the confidentiality and IP clauses should survive. Watch for clauses that survive 'all obligations indefinitely.'

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FreeContractReviewer.com provides AI-generated information to help you understand possible contract issues. It is not legal advice and does not replace a qualified lawyer.