Most NDAs look reasonable on first read. The patterns that hurt the receiving party — broad definitions, indefinite duration, no residuals clause, one-way obligations dressed as mutual — are subtle and consistent across templates. This guide walks through the eight clauses that decide whether the NDA is fair, with the exact language to push for and the exact language to push back on.
1. Definition of confidential information
The first and most important clause. A fair NDA defines confidential information narrowly — typically requiring it to be marked confidential, identified at the time of disclosure, or related to specific listed categories (technology, customer lists, financials). A broad NDA defines confidential information as 'any information disclosed by the disclosing party.' Scrutr flags overly broad definitions and suggests the standard market narrowing.
2. Duration
Confidentiality obligations typically last 2–5 years from disclosure, sometimes longer for trade secrets (which can be indefinite under state law). NDAs that bind you to confidentiality 'in perpetuity' for ordinary business information are below market and worth pushing back on. Scrutr flags the duration and compares it to standard for the disclosure type.
3. Mutual vs one-way
If both parties are exchanging confidential information, the NDA should be mutual — both sides have the same obligations. One-way NDAs are appropriate when only one side is disclosing (e.g. an investor evaluating a startup), but are inappropriate dressed up as mutual when the obligations are actually asymmetric. Scrutr flags structural asymmetry and suggests rebalancing.
4. Permitted uses
An NDA should specify what the receiving party can use confidential information for — typically 'evaluating a potential business relationship' or 'performing services under the Master Agreement.' NDAs that don't restrict use are weaker; NDAs that restrict use to extremely narrow purposes can be impractical. Scrutr identifies missing or mismatched permitted-use clauses.
5. Residuals clause
A residuals clause protects the receiving party's employees from being held responsible for general knowledge and skills retained in unaided memory after the engagement. Standard market position for sophisticated transactions. Scrutr flags the absence of a residuals clause and suggests language that protects the receiving party without making the NDA toothless.
6. Return or destruction of information
On termination, the receiving party should return or destroy confidential information — but the obligation should have practical exceptions (backups, archived emails, legal hold copies). A blanket destruction obligation with no carve-outs is impractical and sometimes legally required to violate. Scrutr flags overly broad destruction language and suggests standard carve-outs.
7. Remedies and injunctive relief
Most NDAs allow the disclosing party to seek injunctive relief — a court order stopping the receiving party from disclosing — without proving monetary damages first. This is standard and reasonable. What's not reasonable: liquidated damages clauses with arbitrary high numbers, or fee-shifting that runs only one way. Scrutr identifies asymmetric remedies.
8. Jurisdiction, venue, and governing law
The disclosing party usually picks their home state. That's not always negotiable, but it's worth knowing — if you're in California and the NDA is governed by Delaware law and the venue is Delaware, a dispute will be expensive to defend. Scrutr identifies the chosen jurisdiction and venue and notes when they're unusually distant from the receiving party's location.