Non-Disclosure Agreements (NDAs) are everywhere in business today. From job interviews to partnership discussions, companies want you to sign them before they'll even talk to you. But what are they really protecting, and what are they hiding?
Questions to Ask About Your NDA
- • What specific information is considered confidential?
- • How long does the confidentiality obligation last?
- • What are the consequences of a violation?
- • Are there carve-outs for required disclosures?
The 3 Most Dangerous NDA Clauses
Clause #1: Eternal Silence
"This agreement shall remain in effect indefinitely and shall survive termination of any business relationship between the parties."
Why it's dangerous: This clause means you could be bound to silence forever, even after leaving the company or ending the partnership.
Negotiation Tip: Set the term to last as long as information remains a trade secret; for other confidential info, many agreements use 2-5 years, but standards vary by industry.
Clause #2: Vague Definitions
"Confidential information includes, but is not limited to, any information related to the business, operations, or affairs of the company."
Why it's dangerous: This could cover everything from the company's coffee brand to their lunch menu, making it impossible to know what's actually confidential.
Fix: Demand specific categories of confidential information and exclude publicly available information, general industry knowledge, and your own expertise.
Clause #3: Liquidated Damages
"Violation of this agreement shall result in liquidated damages of $50,000 per violation, regardless of actual harm suffered by the company."
Why it's dangerous: This sets a predetermined penalty that could bankrupt you even for minor, accidental violations.
Protection: Prefer remedies that allow injunctive relief and actual damages; use liquidated damages only where they're reasonable, not punitive, and jurisdiction-compliant.
When NDAs Are Actually Unenforceable
Legally Unenforceable
- • Clauses that violate public policy
- • Overly broad confidentiality terms
- • Unreasonable time restrictions
- • Clauses preventing whistleblowing
- • Terms that violate labor laws
Still Enforceable
- • Specific trade secrets
- • Customer lists (if truly confidential)
- • Reasonable time limits
- • Clear confidentiality definitions
- • Proper consideration
The NDA Negotiation Playbook
Carve-outs to Include
- • Information already known to you before the agreement
- • Information independently developed without access to confidential data
- • Information disclosed to you by a third party with the right to do so
- • Disclosures required by law or court order (with notice to the discloser)
- • Information that becomes publicly available through no fault of yours
Step-by-Step Negotiation Strategy
- 1Read Everything: Don't skip the fine print. Every word matters.
- 2Identify Red Flags: Look for the dangerous clauses we discussed above.
- 3Prepare Counter-Proposals: Have specific language ready for problematic sections.
- 4Negotiate Confidently: Remember, most NDAs are negotiable.
- 5Get It In Writing: Never rely on verbal promises.
Real-World NDA Horror Stories
The Startup That Wanted Everything
A tech startup tried to make an employee sign an NDA that covered "any information learned during employment, including general industry knowledge and personal observations." The employee refused, and the startup backed down within 24 hours.
The Consultant's Trap
A consultant was asked to sign an NDA with a $100,000 penalty clause. When they questioned it, the company admitted they'd never enforced it and removed the clause entirely.
Your NDA Rights Checklist
What You Should Demand
- • Term lasting as long as information remains a trade secret
- • Clear definitions of confidential info
- • Exclusions for public knowledge and carve-outs
- • Remedies allowing injunctive relief and actual damages
- Carve-outs for required disclosures with notice
What You Should Never Accept
- • Indefinite confidentiality
- • Vague information definitions
- • Excessive penalty amounts
- • Clauses preventing future work
- • One-sided enforcement
When to Walk Away
Red Flags That Mean "Don't Sign"
- • Company refuses to negotiate
- • Clauses about "any information"
- • Excessive penalty amounts
- • Indefinite time periods
- • Vague confidentiality terms
- • Pressure to sign quickly
- • Verbal promises not in writing
- • Clauses preventing future employment
- • One-sided enforcement rights
- • No consideration for signing
Need Help Analyzing Your NDA?
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