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Check the items below that appear in your NDA to calculate your risk score.
Critical Red Flags
High Risk - Do Not SignWhy it's dangerous: You'd be bound by confidentiality obligations forever - literally for the rest of your life. Standard NDAs have 2-5 year terms. Perpetual terms create indefinite liability and make compliance impossible to guarantee long-term.
Example Language
"The obligations of confidentiality shall survive in perpetuity..." or "...shall continue indefinitely..."
Why it's dangerous: A residuals clause lets the receiving party use any concepts, ideas, or know-how they "remember" from your confidential information. This creates a massive loophole - once someone reads your trade secret, it's in their head, and this clause legitimizes using it.
Example Language
"...Receiving Party may retain in the unaided memory of its personnel any Confidential Information..."
Why it's dangerous: This isn't an NDA issue at all - it's a full non-compete agreement buried in an NDA. It could prevent you from working in your own industry for years. Many states (including California) find non-competes unenforceable, but you'd still face legal costs to challenge it.
Example Language
"...shall not directly or indirectly engage in any business that competes with the Disclosing Party..."
Why it's dangerous: This allows them to share your confidential information with unlimited third parties without those parties being bound by confidentiality. Your information could flow to competitors without your knowledge or consent.
Example Language
"...may disclose to its affiliates, partners, contractors, advisors, and any other third parties who have a need to know..."
Why it's dangerous: This allows them to change the NDA terms at any time without your agreement. You could find yourself bound by materially different terms without having agreed to them.
Example Language
"...reserves the right to modify the terms of this Agreement at any time by providing written notice..."
Warning Signs
Medium Risk - NegotiateWhy it's concerning: This requires you to physically mark every piece of confidential information. If you forget to stamp a document or don't send a written summary after a verbal conversation, that information loses protection. Creates operational nightmares.
Example Language
"Confidential Information shall mean only such information that is clearly marked 'CONFIDENTIAL' at the time of disclosure..."
Why it's concerning: You're required to pay for their legal fees and damages if you breach, but they have no corresponding obligation to you. In a mutual NDA, indemnification should be reciprocal.
Example Language
"The Receiving Party shall indemnify, defend, and hold harmless the Disclosing Party from any and all claims..."
Why it's concerning: When "Confidential Information" means virtually everything, you face enormous liability for everyday business communications. How do you train employees when the answer is "everything is confidential"?
Example Language
"...any and all information, data, materials, documents, specifications, techniques, ideas, concepts, know-how, and any other information..."
Why it's concerning: This waives the normal requirement to post a bond when seeking emergency injunctive relief. Bonds protect against frivolous requests - removing this protection shifts litigation risk to you.
Example Language
"...shall be entitled to seek injunctive relief without the necessity of posting any bond or security..."
Why it's concerning: If disputes must be resolved in their state, you'd need to travel and hire local counsel. This adds significant cost and inconvenience that makes enforcement harder for you.
Example Language
"This Agreement shall be governed by the laws of [their state] and all disputes shall be resolved in courts located in [their city]."
Minor Issues
Low Risk - Be AwareWhy to be aware: Standard NDAs exclude information that's publicly available. Without this carve-out, you could technically breach by discussing publicly known information. Most courts would imply this exception, but explicit is better.
Get Negotiation LanguageWhy to be aware: Vague purpose clauses like "purposes related to the business relationship" could be interpreted broadly. Ideally, the permitted purpose should be specifically defined.
Get Negotiation LanguageWhy to be aware: Very short timelines (like "immediately" or "within 24 hours") can be difficult to comply with, especially for information in backup systems or email archives. Reasonable is 30 days.
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