The Scope of Confidentiality
An NDA restricts what you can say, share, or do with information designated as confidential. They can be one-way (where only you are restricted) or mutual (where both parties agree to secrecy). They are ubiquitous in modern business, appearing in everything from job offers and freelance contracts to startup pitches.
The goal is to protect proprietary information while allowing parties to work together.
Key Elements of the NDA
NDAs can vary wildly in scope. When reviewing one, focus on these five critical elements to understand your true level of restriction:
- •Definition of Confidential Information: Is it specific or so vague it covers everything you learn?
- •Duration of the Agreement: How long must you keep the secret? Some NDAs are perpetual.
- •Permitted Use: What exactly are you allowed to do with the information while you have it?
- •Exclusions: Standard NDAs should exclude info you already knew or info that becomes public.
- •Consequences of Breach: What happens if you talk? Look for 'liquidated damages' or 'injunctions'.
Common Mistakes to Avoid
- Not reading the definition: If the definition is too broad, it could restrict your future career.
- Assuming they are all the same: NDAs are highly customizable; the 'standard' version may not be.
- Ignoring the 'Perpetual' tag: Some secrets stay secrets forever, which can be a significant burden.
- Failing to track information: If you don't know what was marked confidential, you can't protect it.
What Happens Next?
If you breach an NDA, the other party can sue you for financial damages and seek a court order (an injunction) to stop further disclosure. In some cases, the agreement specifies a set dollar amount you must pay for any violation.
It's worth noting that some laws, like whistleblower protections, may override an NDA if you are reporting illegal activity. If you're unsure about the scope of an NDA you've been asked to sign, consulting an attorney is the safest path. You can find more about these terms in our glossary.
Disclaimer: This guide provides legal information only and is not legal advice. Consult an attorney before signing an NDA with broad scope or significant stakes.
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