NDAs – when to sign, what to check, and what not to fight over.

Commercial · August 12, 2026 · 5 min read

The short answer

Four clauses decide an NDA: the definition of confidential information, the purpose limitation (what the information may be used for), the term, and the exclusions. And one clause must be hunted for in every draft: obligations that are not confidentiality at all – non-solicits, non-competes or exclusivity – smuggled into a "standard" document.

When to sign at all

• Before a substantive conversation that exposes non-public business or technical information: commercial negotiations, partnership evaluation, onboarding a vendor to a sensitive component.
• Not every conversation justifies an NDA. A first meeting with an investor? Venture funds almost never sign at that stage, and asking signals inexperience. The protection at the introduction stage is simple: don't reveal what is genuinely secret.
• Direction: if both sides disclose – a mutual NDA. A one-way agreement someone sent when you are in fact disclosing too is the most common problem, and the easiest to fix.

The four clauses to actually check

Clause	What to check	Red flag
Definition	Broad enough to cover what you will actually disclose, including orally	A requirement that every item be marked "confidential" in writing – unrealistic in working sessions
Purpose limitation	Use permitted only for the defined evaluation/transaction	No purpose clause – the other side must merely not disclose, but may use
Term	3–5 years as a commercial default; for true trade secrets – as long as the information stays secret	One year on technology that is the core of the business
Exclusions	Public knowledge, prior knowledge, independent development, compelled disclosure (with notice)	No independent-development exclusion – exposure on every future product

The clause hiding inside

The big problem in an NDA is almost never the confidentiality. It is what was dressed up as confidentiality:

• Employee and customer non-solicits – a substantive business restriction buried in clause 9, sometimes covering any employee of the other side, including one who approached you unprompted.
• Exclusivity or no-deal covenants – a commitment not to negotiate with others, inside a document presented as technical.
• A residuals clause (common in large-corporate forms) – permitting the other side to use whatever "remains in the memory" of its people. In practice: an exception that swallows the agreement. As the disclosing party – delete it or narrow it dramatically.

What is not worth the fight

• Declaratory wording – "no licence is granted": true anyway; not worth a redline cycle.
• Tel Aviv vs. Haifa as forum – let it go. An exotic foreign forum that makes enforcement uneconomical – that is worth the fight.
• Liquidated damages – commonly demanded, enforceability limited where the amount is unreasonable; injunctive relief usually matters more.
• "Destroy every copy" undertakings – accept, subject to the standard carve-out for automatic backups and legal retention duties. That carve-out is market standard and concedes nothing.

Frequently asked questions

We received a large corporation's "standard" NDA. Is commenting worthwhile?

On the four core clauses and the smuggled covenants – always. Corporates expect comments on residuals, non-solicits and term; silence signals the document wasn't read.

The NDA was breached. What actually happens?

An immediate demand letter, evidence preservation, and usually an application for injunctive relief – the harm from disseminated confidential information is hard to quantify and harder to undo. That is also why the remedies clause should acknowledge injunctive relief explicitly.

Does an NDA protect an idea pitched to an investor?

Only marginally. Real protection for an idea is fast execution, technical advantage, and sometimes registered IP – not a fund's signature. What is genuinely secret (code, algorithms, data) simply isn't shown in a first meeting.

See also: Three things that delay closing in an M&A deal.

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The above is general information only, current as of the date of publication, and does not constitute legal advice or a substitute for advice on your specific circumstances. Consult a lawyer before acting.

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