What Should Be in a Non-Disclosure Agreement (NDA)?
A vague or generic NDA often fails to actually protect what a business needs protected. The details matter far more than most business owners assume.
By Simon Touma · Updated August 14, 2026
What Are the Essential Terms of a Strong NDA?
Quick answer: A well-drafted NDA should clearly define what information is confidential, specify the permitted use of that information, set a reasonable duration for the confidentiality obligation, identify any carve-outs (like publicly available information), and spell out the remedies available if the agreement is breached.
On This Page
- What Are the Essential Terms of a Strong NDA?
- A Clear, Specific Definition of Confidential Information
- Mutual vs. One-Way NDAs
- Permitted Use of the Information
- A Reasonable, Clearly Defined Duration
- Standard Carve-Outs That Should Be Included
- Remedies for Breach
- Common Mistakes That Weaken an NDA
- Practical Steps Before Sending or Signing an NDA
- FAQs
A Clear, Specific Definition of Confidential Information
The single most important element of an NDA is a clear, specific definition of what actually counts as confidential information. A vague definition, simply referencing “confidential information” without further detail, creates real ambiguity later about what was actually protected and what was not.
Strong NDAs typically describe categories of protected information specifically, business plans, financial data, customer lists, pricing models, proprietary processes, rather than relying on a single generic catch-all phrase that leaves too much open to interpretation later.
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Mutual vs. One-Way NDAs
An NDA can be one-way, where only one party is disclosing confidential information, common when a business shares information with a potential vendor or contractor, or mutual, where both parties are exchanging confidential information, common in partnership discussions or merger negotiations.
Using the wrong structure creates real gaps, a one-way NDA offers no protection for information the other party shares with you, which matters if both sides are genuinely exchanging sensitive information during discussions.
Permitted Use of the Information
A strong NDA specifies exactly what the receiving party is allowed to do with the confidential information, typically limited to evaluating a potential transaction, partnership, or business relationship, not for any other purpose, including competing use.
Without this limitation clearly stated, a receiving party could argue their use of the information, even in ways the disclosing party never intended, was not technically prohibited by the agreement’s actual language.
A Reasonable, Clearly Defined Duration
The confidentiality obligation should have a clear duration, sometimes several years after disclosure, and in some cases, for genuine trade secrets, an indefinite obligation as long as the information remains a protected trade secret under the Arizona Uniform Trade Secrets Act (A.R.S. § 44-401 et seq.).
An NDA with no stated duration, or an unreasonably indefinite one for information that is not a genuine trade secret, can invite challenges to its enforceability, just as an overly broad non-compete would.
Standard Carve-Outs That Should Be Included
Most well-drafted NDAs include standard exceptions, information that was already publicly known, information the receiving party already independently possessed before disclosure, information independently developed without using the confidential information, and information required to be disclosed by law.
These carve-outs are not a weakness in the agreement, they reflect standard, reasonable limits that courts generally expect to see, and their absence can actually make an NDA look overreaching rather than more protective.
Remedies for Breach
A strong NDA should address what happens if it is breached, including the potential availability of injunctive relief, a court order stopping further disclosure or use, since monetary damages alone are often inadequate once confidential information has already been improperly shared or used.
Clearly addressing this in the agreement itself can meaningfully affect how quickly a court is willing to act if a breach actually occurs and immediate action is needed to limit further harm.
Common Mistakes That Weaken an NDA
- Using a generic template without tailoring the definition of confidential information to the actual business.
- No clear duration, or an unreasonable, indefinite term for non-trade-secret information.
- Missing standard carve-outs, making the agreement look overbroad.
- Failing to specify permitted use, leaving room for the receiving party to argue their use was not prohibited.
Practical Steps Before Sending or Signing an NDA
- Identify specifically what needs protecting before drafting or reviewing the agreement.
- Confirm whether a one-way or mutual NDA actually fits the situation.
- Review the duration and carve-outs for reasonableness.
- Have an attorney review the agreement before signing, especially for high-value or sensitive business discussions.
Need an NDA drafted or reviewed in Arizona? Talk to our litigation team before you respond.
Call 602-932-6010Related Practice Areas
Business Protection and Asset Risk ManagementBusiness Transactions and ContractsWhat Should Be in a Non-Disclosure Agreement (NDA)? FAQs
Is a generic NDA template good enough for my business?
Generally not recommended, a generic template often lacks the specific definitions and tailored terms needed to actually protect your particular business information.
Do NDAs expire?
Yes, typically, most have a defined duration, though genuine trade secrets can potentially remain protected indefinitely under Arizona’s trade secret law, as long as they remain a protected secret.
What’s the difference between a one-way and mutual NDA?
A one-way NDA protects information from only one party, a mutual NDA protects information exchanged by both parties, using the wrong type leaves real protection gaps.
Can I sue if someone breaches an NDA?
Yes, a properly drafted NDA generally provides for legal remedies, including potentially injunctive relief and damages, if it is breached.
Do I need an NDA for every business conversation?
Not necessarily, but any conversation involving genuinely sensitive business information, financials, trade secrets, proprietary plans, should generally be covered by one before the information is shared.
What information typically doesn’t need to be covered by an NDA?
Information that is already publicly available, or information the other party already independently knew, is typically carved out as an exception in a well-drafted agreement.
Should an NDA be reviewed by an attorney even for a small business deal?
Yes, particularly for anything involving genuinely sensitive information, an improperly drafted NDA can leave real gaps in protection that only become apparent after a breach has already happened.
Key Takeaways
- A clear, specific definition of confidential information is the most important part of an NDA.
- Choosing between a one-way and mutual NDA structure matters for what is actually protected.
- A reasonable, clearly defined duration helps the agreement hold up if challenged.
- Standard carve-outs are expected and strengthen, rather than weaken, an NDA.
- Addressing remedies, including injunctive relief, up front matters if a breach ever occurs.
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