Agreement Templates

5 Things to Look for in NDA Before Signing it

Various companies have to deal with sensitive information and for a smooth functioning of a business, your employer may ask you to sign a Non-Disclosure Agreement (NDA). It is an official process and shouldn’t be taken as any sign of disrespect to you. A Non-Disclosure Agreement has to be signed for a proper and efficient flow of confidential information through the chain of command. It is a standard process but while signing an NDA, there are various things you should take care of;

Don’t Sign anything you couldn’t understand

While signing a Non-Disclosure, you should read the documents thoroughly and if there is a use of any vague and secretive language you don’t understand then you should report it to your employer and ask for details about the information. A lot of information which is publicly open and known to you prior can be listed in the NDA, so read it thoroughly for any such sentences which are not clear.

Carefully read the conditions and penalties of breaching

In an NDA, the information is needed to be protected under various conditions. You should make sure that the conditions are not too extreme or unfair. You should always check for the details like;

  • Non-Disclosure period (the time for which the information have to be kept secret)
  • The nature of information needs to be kept a secret.
  • All the details of the information you have to keep.

Every NDA states the penalties in case you breach the contract and discloses any confidential information, so before signing any such agreement make sure that the penalties are not too harsh or unfair. If the punishment doesn’t fit the breach then the agreement must be favoring the other party and in such case, you should refrain yourself from signing it.

Never agree with Liquidated Damage

In case you agree for liquidating damage, the other party is entitled to receive a fixed amount of money as compensation without even proving that you disclosed the information. This puts you at risk and liquidate damage is considered oppressive and against public policy. But if there is a Liquidate damage provision in your NDA, you shouldn’t sign it.

Take Expert Opinion

You are not a lawyer and may have difficulty to understand every term and condition, so instead of ignoring the points making you suspicious, hire an attorney to take a look at the NDA for you. You might think that it’s too much to hire an attorney top to cross-check a non-disclosure but it’s better to be safe than sorry.

The terms of an NDA are not set in stone

You should get one thing clear that you should never make a deal if you are not completely satisfied. So if you are entering a Non-disclosure then make sure that you are getting something out of it and it’s not biased to any one party. If you are not satisfied and want to make changes you can always ask for it, if your demands are fair another party may agree to negotiate.

A Non-Disclosure Agreement is a very important document, which signed to ensure trust between employer and employee or two companies. But sometimes an NDA can be drafted to your disadvantage so at last, Just don’t sign what you don’t understand.

Also falls under: how to analyze a NDA,  Reviewing NDA, What to look for in Mutual NDA


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