NDA Review Framework

This checklist helps determine whether an NDA from an external party requires legal team review or contains standard acceptable terms. Apply these criteria systematically when analyzing any NDA document.

Green Flags (Generally Acceptable Terms)

These terms are typically standard and acceptable in most NDAs. Their presence indicates a reasonable agreement:

Mutual confidentiality obligations where both parties have similar obligations to protect each other's information. Standard definition of confidential information that includes typical business information marked confidential. Standard exclusions for information that is publicly available, was already known to the recipient, was received from a third party without restriction, or was independently developed. Term length of 1-3 years for confidentiality obligations is industry standard. Standard purpose limitation where information is used only for evaluating a potential business relationship. Reasonable return/destruction obligations for confidential materials at agreement end. Governing law in states where the company regularly does business (CA, NY, TX, etc.).

Yellow Flags (May Need Legal Review)

If any of these appear in the NDA, consider consulting with legal before signing:

One-way confidentiality that only protects the other party's information while leaving your information unprotected. Unusually broad definition of confidential information that goes beyond typical business information. Term length over 3 years or perpetual confidentiality obligations that never expire. Unusual governing law in foreign jurisdictions or unfamiliar states. Restrictive assignment provisions that limit your ability to assign the agreement. Unclear purpose for information sharing that could be interpreted broadly. Unusual or ambiguous use limitations on how you can use disclosed information.

Red Flags (Requires Legal Review)

If any of these appear in the NDA, STOP and contact legal before signing:

Non-compete provisions of any kind that restrict business activities. Intellectual property transfer language that assigns or licenses IP rights. Exclusive relationship clauses that prevent working with competitors. Most-favored-nation clauses requiring equal or better terms. Right of first refusal on business opportunities. Restrictions on hiring or soliciting employees beyond standard non-solicitation. Unusual indemnification provisions that create one-sided liability. Significant financial penalties for breach (liquidated damages clauses). Mandatory arbitration clauses with unusual terms or venues. Automatic renewal provisions without clear termination rights. Provisions preventing disclosure to government agencies or regulators. Specific performance language or unusual remedies beyond standard injunctive relief. Any language suggesting this is more than just an NDA - embedded business terms, partnership language, or commitments beyond confidentiality.

Analysis Approach

When reviewing an NDA: First scan for red flags - any single red flag means the document needs legal review. Then check for yellow flags - multiple yellow flags or one significant yellow flag warrants consultation. Finally, confirm green flag elements are present - their absence may indicate non-standard terms worth questioning.