NDA Review · May 2026
NDA Red Flags: 8 Things to Look For Before You Sign
Most NDAs look routine. The dangerous ones are designed to look routine. These eight clauses are where legal risk gets created without anyone explaining it to you at signing.
One-sided confidentiality labeled as 'mutual'
The NDA says "mutual" in the title, but only one party actually discloses confidential information. The other party's obligations are narrower or buried in exceptions. Courts have noted this asymmetry but typically enforce the written terms.
You may have full confidentiality obligations while the other party has limited ones.
No carve-outs for publicly available information
Without standard exceptions, you could be bound to keep secret something that's already public knowledge, that you already knew, or that you independently developed. Courts often read these exceptions in, but you shouldn't rely on that.
Overly broad definition creates liability for information that should be free.
Indefinite confidentiality term
Perpetual NDAs are increasingly hard to enforce and commercially unusual. A 5-year term is industry standard. "Indefinitely" or "in perpetuity" creates a permanent compliance burden and has been found unenforceable in some jurisdictions.
You're bound forever — or forced to litigate the enforceability of "indefinite."
Unilateral injunctive relief — company only
The NDA gives Company the right to seek an emergency court order (injunction) without notice, without posting a bond, and without proving actual damages. You have no equivalent right. Courts can grant these ex parte — meaning without you present.
Company can freeze your business based on an allegation before you have a chance to respond.
No limitation of liability
If the NDA contains no liability cap and no exclusion of consequential damages, a claimed breach can expose you to claims for lost profits, reputational harm, and third-party damages — all without any ceiling. Combined with a broad definition of Confidential Information, almost anything can be framed as a breach.
Uncapped exposure on any breach, even technical ones.
Non-solicitation covering people you've never met
The NDA prohibits you from soliciting "any employee, officer, director, or client of Company" — sometimes including those you had no direct contact with. This can prevent you from approaching entire client lists of large companies.
You may be unable to pursue business relationships with strangers for 1–2 years.
Mandatory dispute resolution in an inconvenient jurisdiction
"All disputes shall be litigated exclusively in Delaware" (or New York, or wherever the company is headquartered) with an irrevocable consent clause. Litigation in another state means travel, local counsel, and costs that dwarf many dispute amounts.
Practical inability to enforce your rights cost-effectively.
IP assignment language in an NDA
NDAs occasionally include IP assignment provisions that vest ownership of anything you create during the engagement in the other party — even pre-existing tools and independently developed work. This is not standard for an NDA and significantly expands its scope.
You may unintentionally assign ownership of pre-existing intellectual property.
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