A Non-Disclosure Agreement (NDA) is a contract that creates a confidential relationship between parties to protect sensitive business information, trade secrets, or proprietary data shared during discussions or a project. It defines what information is confidential, how it may be used, and the obligations of the receiving party to keep it secret.
The party disclosing the information usually drafts the NDA, and its standard form tends to heavily favour that party's interests. The party receiving the information should review the agreement closely, as overly broad or one-sided terms can create unexpected liability and restrict future business activities.
Who it usually favours: The standard form usually favours the disclosing party; the receiving party should push back on terms that are unreasonably broad or burdensome.
What each one settles in a non-disclosure agreement, and the wording that shifts the risk.
Why it matters. This clause sets the boundaries of what the receiving party must protect. It determines the scope of the entire agreement.
Watch for. A definition that is unlimited, includes information developed independently, or covers information already in the public domain may impose an impossible burden on the receiver.
Why it matters. This clause lists the categories of information that are not protected, such as publicly known facts or data the receiver already possessed. It is a critical safeguard for the receiving party.
Watch for. The absence of standard exclusions, or exclusions that are drafted too narrowly, can make the receiver liable for using or disclosing information that is not genuinely confidential.
Why it matters. This clause restricts the receiving party from using the confidential information for anything other than the specific business purpose defined in the agreement.
Watch for. A vaguely defined purpose, or a clause that allows the disclosing party to unilaterally expand the purpose, can restrict the receiver's normal business operations.
Why it matters. This clause states how long the NDA remains in effect and for how long the confidentiality obligations survive after the agreement ends.
Watch for. An indefinite survival period for trade secrets is common, but an unreasonably long or perpetual term for general business information may be impractical and risky for the receiver.
Why it matters. This clause dictates what the receiving party must do with the confidential information upon the disclosing party's request or when the agreement terminates.
Watch for. A clause requiring the destruction of all copies without allowing the receiver to retain one copy for legal or regulatory compliance can create a conflict with statutory obligations.
Why it matters. This clause determines which jurisdiction's laws will interpret the contract and where any disputes will be resolved. It has a major impact on the cost and convenience of litigation.
Watch for. A governing law and jurisdiction clause that favours a location inconvenient to the receiving party can make defending a claim prohibitively expensive.
Why it matters. This clause outlines the legal remedies available if confidentiality is breached, often including the right to seek an injunction from a court.
Watch for. A clause that allows the disclosing party to seek an injunction without proving actual damage, or that requires the receiver to pay the disclosing party's legal fees, significantly increases the receiver's risk.
Why it matters. An NDA may sometimes include clauses that restrict the receiving party from hiring the disclosing party's employees or competing in a certain market.
Watch for. These restrictions are often hidden in an NDA and can be an unreasonable restraint of trade if they are not narrowly tailored in scope and time, potentially making them unenforceable under the Indian Contract Act, 1872.
A unilateral NDA imposes confidentiality obligations on only one party, typically the receiver of information. A mutual NDA imposes these obligations on both parties, which is more appropriate when each side will be sharing sensitive information with the other.
An NDA should only restrict the use and disclosure of confidential information. If it contains a non-compete clause that prevents you from working in a certain field after the agreement ends, that clause may be challenged as an unreasonable restraint of trade under the Indian Contract Act, 1872, and is worth reviewing closely.
An advocate can upload the NDA, and the tool detects the document type, parties, and governing law. It then splits the contract into clauses and checks each one against central Indian Acts, flagging points for the advocate to confirm. It also assesses which party each clause favours and produces a summary with ranked findings and suggestions on what to ask for, serving as a starting point for a human advocate's review.
Free trial · Assistive review, not legal advice — every finding is a starting point for an advocate.