May 2026 - NDAs, Read before You Sign

Nondisclosure Agreements (NDAs) are a common part of business. They help protect all parties when sensitive information is being shared.

Because NDAs are used so frequently, they don’t receive the attention they deserve. Many companies use "boilerplate" agreements, while more mature organizations tailor the language to fit their specific needs and risks.

Regardless of who drafts the document, it should always be read carefully before signing. There are several areas to understand.

First, review the governing law section. This identifies which state will be used if legal action becomes necessary. In most cases, you would prefer your own state or, at a minimum, a neutral location.

Second, look at the length of the agreement. Many NDAs remain in effect for two to three years, while others may extend to five years or more. The duration is often based on the perceived value and sensitivity of the information being shared.

Finally, pay close attention to the remedy provisions. These sections describe what happens if the agreement is violated. Some NDAs include fixed-dollar penalties or other predefined damages. In some cases, these amounts may be significantly higher than the actual damages caused by a violation.

NDAs are important business documents, but they should never be treated as "routine paperwork". Take the time to read and understand the agreement you are signing.

Note: This blog is provided for informational purposes only and is not legal advice. Consult qualified legal counsel regarding contractual matters.