Signing an NDA? Here is what to check before you do
Non-disclosure agreements are one of the most commonly signed contracts in UK business. They are exchanged before sales conversations, at the start of partnerships, before due diligence processes, and whenever one party needs to share information they consider confidential.
Because NDAs are so routine, many people sign them without reading them carefully. This is a mistake. The terms of an NDA determine what you can and cannot say, for how long, and what happens if you say something you should not have.
Is it mutual or one-sided?
The first thing to check is whether the NDA is mutual — protecting both parties' confidential information — or one-sided, protecting only one party.
A one-sided NDA is not inherently unfair. If you are the party receiving confidential information — sitting in on a pitch, reviewing financials during due diligence — it is reasonable for the disclosing party to want protection.
But if you are sharing information too — as in a typical early-stage conversation between two businesses — a mutual NDA better reflects the reality of the situation. Signing a one-sided NDA when you are sharing information as well as receiving it leaves your information unprotected.
What counts as confidential information?
The definition of confidential information determines what you are prohibited from disclosing. A broad definition — "any information disclosed by one party to the other" — covers a lot. A narrow definition that requires information to be marked as confidential in writing may leave important disclosures unprotected.
Check whether the definition is broad enough to cover the information you actually need to protect, and whether it is so broad that it might catch information you would normally be free to discuss.
What are the exceptions?
Every well-drafted NDA includes exceptions — categories of information that are not treated as confidential even if they would otherwise fall within the definition. Standard exceptions include information that is already publicly known, information you already knew before receiving it, information you received independently from a third party, and information you are required to disclose by law.
These exceptions are important. Without them, you could be technically liable for disclosing information that was already in the public domain.
How long does it last?
NDAs should have a defined duration — typically one to three years for commercial negotiations, longer for ongoing partnerships or arrangements involving particularly sensitive information.
A perpetual NDA — one with no end date — creates an indefinite obligation that may be difficult to manage. Information that is genuinely sensitive today may become public knowledge in two years, but without a duration clause you remain technically bound.
What are the consequences of breach?
Most NDAs include provisions for injunctive relief — allowing the disclosing party to seek a court order preventing further disclosure if there is a breach. This is standard and reasonable.
More significant is whether the NDA specifies liquidated damages — a fixed sum payable for any breach regardless of actual loss. Liquidated damages clauses are enforceable in the UK if they represent a genuine pre-estimate of loss, but an extravagant figure may not be enforceable. Check whether the sum specified is proportionate to the value of the information being protected.
Getting your NDA reviewed
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