Red Flags You Should Never Accept
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Perpetual Obligations
Confidentiality that lasts "forever" with no end date
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Hidden Non-Compete
Restrictions on competing buried inside the NDA
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Auto Injunction
Court orders granted without proving actual harm
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No Public Info Carve-Out
Even publicly available info treated as confidential
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Can't Consult Lawyers
No exception for sharing with legal counsel
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Unlimited Liability
No cap on damages or broad indemnification
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Clause Library: What Good Looks Like
Reference examples of well-drafted NDA clauses you can use in negotiations.
🧠 Residuals Clause
▼A residuals clause protects your team's ability to use general knowledge and skills retained in memory, even after exposure to confidential information.
Example Language
"Notwithstanding anything to the contrary, either party shall be free to use for any purpose the Residuals resulting from access to or work with Confidential Information. 'Residuals' means information in intangible form retained in the unaided memories of Representatives who have had access to Confidential Information, including ideas, concepts, know-how, or techniques."
⏱ Reasonable Confidentiality Period
▼Confidentiality obligations should have a clear end date. 2-5 years from disclosure is standard for most B2B relationships.
Example Language
"The obligations of confidentiality set forth herein shall survive for a period of three (3) years following the disclosure of the applicable Confidential Information, except with respect to trade secrets, which shall be protected for so long as such information qualifies as a trade secret under applicable law."
💾 Practical Return/Destruction
▼Return and destruction obligations should account for routine IT backups and legal/regulatory requirements.
Example Language
"Upon written request, the Receiving Party shall return or destroy all Confidential Information; provided, however, that (i) the Receiving Party may retain one archival copy solely for legal compliance purposes, and (ii) Confidential Information contained in routine IT backup systems may be retained subject to continued confidentiality obligations until destroyed in the ordinary course."
⚖ Balanced Injunctive Relief
▼Injunctive relief should be available but shouldn't pre-waive important legal protections like bond requirements.
Example Language
"Each party acknowledges that a breach of this Agreement may cause irreparable harm for which monetary damages may be inadequate, and agrees that the non-breaching party shall be entitled to seek equitable relief, including injunction and specific performance, in addition to any other remedies available at law or in equity."
✅ Standard Carve-Outs
▼Every NDA should exclude information that is public, already known, independently developed, or received from third parties.
Example Language
"'Confidential Information' shall not include information that: (a) is or becomes publicly available through no fault of the Receiving Party; (b) was rightfully in the Receiving Party's possession prior to disclosure; (c) is independently developed by the Receiving Party without use of or reference to the Confidential Information; or (d) is rightfully obtained by the Receiving Party from a third party without restriction on disclosure."
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