The Hidden Dangers in NDAs: What Businesses Miss in Confidentiality Agreements

NDAs are meant to safeguard your company, but hidden or unexpected terms can flip the script—exposing your business to unnecessary risk, legal liability, or strategic disadvantage.

Here’s a closer look at the NDA clauses that often fly under the radar—and why your legal team never treats an NDA as boilerplate.

1. Overbroad Definitions of “Confidential Information” or “Representatives”

Some NDAs define confidential information so broadly that they effectively bind your company to secrecy over information you already knew, information in the public domain, or insights independently developed. This can hamper your future freedom to operate—especially in industries where multiple players pursue similar innovations.

“Representatives” can also have a very broad definition: your aunt, your mother and on it goes …

Risk: You may inadvertently agree not to use or disclose ideas you already owned, limiting future projects or opening the door to unfounded legal threats.

Pro Tip: Ensure the definition excludes information that was already known, independently developed, or publicly available at the time of disclosure. Representatives should be people that “need to know” and you may want to restrict third party contractors.

2. One-Way vs. Mutual Obligations

Some NDAs are drafted as one-way (only protecting the disclosing party), even in situations where both sides are sharing sensitive information. This imbalance can leave your company exposed if your information is misused.

Risk: Your confidential information may not be protected at all, while you're still bound by strict obligations.

Pro Tip: In most negotiations, a mutual NDA (MNDA) is the fair.

5. Non-Solicitation + Non-Circumvention

Some NDAs include harmless sounding but overly restrictive clauses, which prohibit you from hiring or even contacting the other party’s employees or clients, even in the normal course of your business. Some industries are small and these unfairly prevent your company from doing its normal business. This is why Venture Capital firms traditionally don’t sign NDAs. They simply encounter too many deals, many for the same kind of business, so an NDA is an unwarranted liability.

Risk: These hidden clauses can limit your future recruiting, partnerships, or business development efforts.

Pro Tip: Always review NDAs holistically. A document labeled “Confidentiality Agreement” might include far more than just confidentiality terms.