Non-Disclosure Agreement Checklist Before Sharing Confidential Information

Start With the Purpose

An NDA should say why confidential information is being shared. The purpose might be evaluating a business relationship, discussing investment, performing services, reviewing a product, or exploring a transaction. A clear purpose limits how the receiving party may use the information.

Without a purpose clause, the receiving party may argue that broader use was allowed. Keep the purpose narrow enough to protect the disclosing party but practical enough for the receiving party to do what the relationship requires.

Define Confidential Information

The definition should cover the information that truly needs protection: trade secrets, business plans, financials, customer lists, pricing, technical materials, source code, designs, product roadmaps, data, and nonpublic communications. It can include written, oral, visual, and electronic information.

Avoid defining everything in the universe as confidential. Overbroad language can be hard to administer. If oral information is confidential only when confirmed in writing, state the confirmation deadline.

List the Standard Exclusions

Most NDAs exclude information that is already public, already known by the receiving party, independently developed without using confidential information, or lawfully received from a third party. These exclusions make the agreement fair and more workable.

The agreement can also address legally required disclosures. If a subpoena or court order requires disclosure, the receiving party may need to provide prompt notice and cooperate with efforts to limit disclosure where legally allowed.

Set Use, Access, and Security Rules

The receiving party should use confidential information only for the stated purpose. Access should be limited to people who need to know and are bound by confidentiality duties. For sensitive data, add security requirements that match the risk.

If contractors, affiliates, advisers, or employees may see the information, say so. The receiving party should remain responsible for unauthorized disclosure by people it allows to access the information.

Return, Destruction, and Term

The NDA should explain what happens when discussions end. The receiving party may need to return or destroy confidential materials, delete copies, and certify destruction on request. Some archival or legal compliance copies may be allowed if they remain protected.

Term length should match the information. Trade secrets may need protection as long as they remain secret. Ordinary business information may have a fixed confidentiality period such as two to five years, depending on context.

Remedies and Next Steps

NDA remedies often include injunctive relief, damages, attorney fees where allowed, and other equitable remedies. The point is to give the disclosing party a fast response if confidential information is threatened or leaked.

Before sharing anything valuable, sign the NDA first, label sensitive materials, keep a record of what was shared, and avoid oversharing beyond the stated purpose.

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