NDA Red Flags: Six Clauses to Check Before You Sign
A non-disclosure agreement can look like a formality. Many people sign one before a first call, a pitch or a trial project. But some NDAs go further than keeping secrets. They can limit who you work with, last forever or put most of the risk on you.
This page is general information, not legal advice.
Below are six common NDA red flags. For each one you'll see example wording, why it can work against you and what you could ask for instead. If the NDA is part of a larger deal, also read our guides on freelance contract red flags and job offer red flags.
1. A definition of confidential information that covers everything
Example wording (illustrative, not from a real contract):
"Confidential Information means any and all information disclosed by the Company, in any form, whether or not marked as confidential, including information the Recipient learns or develops in connection with the relationship."
Why it works against you
If everything counts as confidential, you can't easily tell what you're allowed to use. Information you already knew, public information or ideas you came up with yourself could all fall inside it. That leaves you open to disputes over ordinary know-how.
What to ask for instead
Ask for a definition limited to information that is marked or clearly identified as confidential, plus the standard exclusions.
Sample wording to propose:
"Confidential Information does not include information that (a) is or becomes public through no fault of the Recipient, (b) was known to the Recipient before disclosure, (c) is received from a third party without restriction, or (d) is independently developed by the Recipient."
2. No time limit
Example wording (illustrative, not from a real contract):
"The Recipient's obligations under this Agreement shall survive indefinitely."
Why it works against you
An open-ended duty means you could be on the hook for the same information years from now, long after it stopped mattering. That makes compliance hard to track and the risk hard to judge.
What to ask for instead
Propose a fixed confidentiality period after the relationship ends. Narrow categories, such as genuine trade secrets, can be handled separately.
Sample wording to propose:
"The Recipient's obligations shall continue for [agreed number] years after the end of this Agreement, except for trade secrets identified in writing, which shall remain protected for as long as they qualify as trade secrets."
3. One-way obligations when both sides share information
Example wording (illustrative, not from a real contract):
"The Recipient shall hold all Confidential Information of the Company in strict confidence."
Why it works against you
If you're also sharing pricing, methods, client lists or drafts, a one-way NDA protects only the other party. Your own information goes over with no matching promise.
What to ask for instead
Ask for a mutual NDA where the same duties apply to both parties.
Sample wording to propose:
"Each party may disclose Confidential Information to the other, and each party, as a recipient, shall protect the other party's Confidential Information under the terms of this Agreement."
4. A non-solicit or non-compete hidden inside the NDA
Example wording (illustrative, not from a real contract):
"During the term and for [period] thereafter, the Recipient shall not, directly or indirectly, provide services to any client of the Company or engage in any competing business."
Why it works against you
This is no longer about secrecy. It limits who you can work for or with. Because it sits in a document titled "NDA", people often miss it. Rules on these restrictions may differ by location, so ask a qualified lawyer how one would apply to you.
What to ask for instead
Ask to remove it, or at least to keep any restriction narrow and specific. The same issue comes up in influencer brand deal contracts as broad exclusivity.
Sample wording to propose:
"Nothing in this Agreement restricts either party from doing business with any person or entity, provided Confidential Information is not used or disclosed in breach of this Agreement."
5. A residuals clause that favours the other side
Example wording (illustrative, not from a real contract):
"The Company may use any information retained in the unaided memory of its personnel, including ideas, concepts and techniques, for any purpose."
Why it works against you
A residuals clause can let the other party use whatever its staff remember from your disclosures. If you're the one sharing ideas, this may cut through much of the protection the NDA seems to give you.
What to ask for instead
Ask to delete it. If they insist, ask for it to apply to both sides equally and to exclude anything specifically identified as confidential.
Sample wording to propose:
"No license or right to use Confidential Information is granted by this Agreement, including any right based on information retained in memory."
6. Automatic injunctions and one-sided fee shifting
Example wording (illustrative, not from a real contract):
"The Recipient agrees that any breach will cause irreparable harm, entitling the Company to injunctive relief without bond, and the Recipient shall pay all of the Company's legal fees."
Why it works against you
You're agreeing in advance that any breach, even a minor one, causes serious harm, and you're covering only their legal costs. That can make a dispute expensive for you and cheap for them. How a court treats such wording may vary, so ask a qualified lawyer. For related clauses, see limitation of liability and mandatory arbitration.
What to ask for instead
Ask for neutral remedies and for fee shifting to apply both ways.
Sample wording to propose:
"Either party may seek injunctive relief as permitted by applicable rules. In any dispute under this Agreement, the prevailing party may recover its reasonable legal fees."
Scan your own document free
Example wording only takes you so far. The real question is what your own NDA says. ScanMyTerms NDA review scans your document in about a minute and flags clauses that work against you. It shows the exact wording and what to ask for instead. The free preview shows the risk count and the first two findings. The full report is a one-time $5 per document. For platform terms, try the terms of service checker.
This page is general information, not legal advice.