NDA Review Checklist: What to Strike, What to Cap, What to Never Sign

First, the frame: three questions before any clause

Is it mutual or one way? A one way NDA protecting only their information, in a discussion where you will also reveal yours, is the most common and most easily fixed asymmetry: make it mutual and half the negotiation disappears. What is the term, and what survives? An NDA should have a defined confidentiality period, three to five years from disclosure is market for ordinary business information, with genuine trade secrets sometimes protected indefinitely. Perpetual confidentiality over everything is a drafting habit worth pushing back on, because information ages and obligations should too. What triggered it, and does the purpose clause match? The permitted purpose defines what the recipient may do with the information. A narrow purpose, evaluating a potential services engagement between the parties, protects the discloser; an absent or sprawling one turns the NDA into a general licence. Fix the purpose first; many downstream fights are really purpose clause fights.

The clauses to fix: strike or cap

The definition of confidential information. The fair version covers information disclosed in connection with the purpose, marked or reasonably understood as confidential. Watch for definitions that sweep in everything either party has ever known about the other, or that omit the standard exceptions. Insist on the classic five: information already known, independently developed, received from a third party lawfully, publicly available, or required to be disclosed by law or regulator, with notice where lawful. Residuals clauses. A residuals clause says the recipient may freely use anything retained in the unaided memory of its personnel. In an NDA with a large counterparty whose engineers will study your product, a residuals clause is a politely worded transfer of know how. Strike it, or narrow it to general skills and experience rather than your specific information. Indefinite return and certification duties. Return or destroy on request is standard; certified destruction of every copy including backups is often technically impossible. Cap it with a carve out for automatic archival backups, retained under continuing confidentiality. Injunctive relief and liability. A clause acknowledging that breach causes irreparable harm supporting injunctions is normal and mutual. What deserves a cap is any indemnity or damages clause layered into the NDA, especially uncapped ones sitting outside any liability framework, since Sections 73 and 74 of the Indian Contract Act will govern compensation anyway, and an NDA is a strange home for open ended monetary promises. Jurisdiction and disputes. For a four page document, dispute clauses matter disproportionately, because NDA disputes are usually urgent injunction matters. A venue where you have no presence prices enforcement out of reach. Choose a workable Indian venue, and think twice before arbitration clauses in NDAs, since urgent injunctive relief through courts is often exactly the remedy you need.

The three clauses to never sign

Non compete dressed as confidentiality. A clause preventing you from developing similar products, serving similar customers, or working in the field, inside an NDA, is not confidentiality; it is a covenant restraining trade, smuggled past your guard. Under Section 27 of the Indian Contract Act, agreements in restraint of trade are void except in narrow cases, but the fight itself is expensive, and signing invites it. Strike it, whole. Non solicitation and non dealing riders. Related cousins: clauses barring you from hiring anyone from the counterparty, or dealing with anyone they introduced, for years. In a genuine transaction these may belong in the definitive agreement, negotiated with scope and consideration; in a first meeting NDA they are landmines. Strike or resist, and if the deal truly needs them, negotiate them consciously with tight scope and duration. IP assignment by ambush. Any language under which ideas, feedback, or improvements you share become the counterparty’s property. Feedback clauses in vendor NDAs commonly do a mild version: anything you suggest about their product, they own. The aggressive version reaches your own pre existing ideas. For a startup pitching a corporate partner, this clause can quietly cloud title to the very product being pitched, precisely the kind of defect that surfaces in the due diligence exercises we describe in our investment readiness article. Strike it, or confine it to feedback about the counterparty’s own products, licensed rather than assigned.

A note on signing NDAs as the discloser

Everything above assumed you are mostly the recipient. When you are the one disclosing crown jewels, invert the checklist: you want a tight purpose, a long enough term, marking discipline on your own side, and a counterparty entity actually worth suing, an NDA with a shell company protects nothing. And remember the operational truth no clause fixes: an NDA is a remedy, not a lock. Disclose in layers, and keep the deepest layer for after the definitive agreement.

A sixty second triage you can teach anyone

For teams that sign NDAs weekly, train every deal owner on this quick screen before any signature. Read the parties and check the counterparty is a real entity, not a founder’s personal name or an unrelated shell. Read the definition of confidential information and confirm the five standard exceptions appear. Search the document for the words “compete,” “solicit,” “assign,” “residual,” and “feedback,” because the three never sign species almost always announce themselves with one of those words. Check the term has a number in it, and check the venue is a city you could actually litigate in. Anything that fails the screen goes to proper review; everything else signs same day. Sixty seconds, five checks, and the ten percent stops getting through on autopilot. One more habit completes the system: keep a register. A simple sheet listing every NDA signed, the counterparty, the date, the term, and the venue turns your obligations from folklore into data. When a former employee asks what you can tell a new employer, or a diligence team asks what confidentiality duties bind the company, the register answers in minutes what a laptop archaeology project would answer in days. Confidentiality obligations you cannot remember are obligations you will eventually breach by accident, and the register is the cheapest insurance against that particular own goal.

What happens when an NDA is actually breached

Since the whole point of the review is the day things go wrong, it helps to know what that day looks like. The primary remedy in India is the injunction: a court order restraining further disclosure or use, sought urgently under the Specific Relief Act, which is why the irreparable harm acknowledgment and a sensible venue clause matter so much. Damages follow under Section 73 of the Contract Act, but proving the rupee value of a leaked idea is notoriously hard, which is why sophisticated disclosers rely on layered disclosure and injunctions rather than compensation fantasies. Criminal law occasionally assists, breach of trust provisions and the IT Act’s data provisions in egregious cases, but treat that as pressure, not strategy. The practical sequence: preserve evidence, send a reasoned cease and desist attaching the NDA, and move for interim relief fast, because delay is the argument opposing counsel loves most.

Can AI help review NDAs?

NDA review is arguably the single best entry point for AI in a legal workflow, because the documents are short, patterned, and high volume. AI tools can classify an incoming NDA against your standard positions in seconds, flag the dangerous species, residuals, non competes, feedback assignments, missing exceptions, and produce a markup before the meeting it was sent for. Teams that route every NDA through such a screen stop signing blind, at essentially zero marginal cost. The cautions are proportionate but real: AI can miss a trap phrased novelly, misjudge enforceability questions like Section 27’s treatment of restraints, and cannot weigh the relationship context, whether this counterparty’s template is worth fighting over at all. Screen every NDA with the machine; send the flagged ones to a qualified human, and never let the low stakes reputation of the document class lower the guard the ten percent exists to exploit.

When to Review This

• Read the frame first, mutuality, term, purpose, then fix the definition, strike residuals, cap the operational duties, and choose a venue you can actually litigate in. Three species end the conversation: non competes in disguise, solicitation riders, and IP assignment by ambush. The NDA’s reputation for harmlessness is statistically deserved and occasionally weaponised, and the whole discipline is a ten minute checklist standing between you and the ten percent.