Should You Sign Someone Else’s NDA? What to Check First

A non-disclosure agreement (NDA) can be useful before commercial discussions, due diligence, service negotiations, product demonstrations, or investment conversations.

But simply because it’s standardised doesn’t mean you should sign it right away. Our guide covers how NDAs work in Australia and what to check before signing an NDA.

• Should you sign someone else’s NDA?
• Is the NDA one-way or mutual?
• What counts as confidential information?
• How long do the confidentiality obligations last?
• Are you agreeing to an indemnity?
• Does the NDA contain an IP clause?
• Does the NDA include a non-compete, non-solicitation, or other restraint?
• Are there clauses that do not belong in a basic NDA?
• What happens if there is a breach?
• What do you have to do when discussions end?
• Which law and jurisdiction apply?
• Should you negotiate an NDA before signing it?
• What if the other party refuses to use your NDA?
• Can you sign the NDA now and negotiate the main contract later?
• NDA review checklist before you sign
• When should you get an NDA reviewed by a lawyer?
• FAQs

Should you sign someone else’s NDA?

Potentially, yes. Clients, suppliers, investors, business partners, and service providers often provide their own NDA.

An NDA is a legally binding contract intended to protect sensitive information shared between parties. As such, it’s important to review its terms before signing, as confidentiality agreements in Australia can allocate risk in very different ways.

Check that:

• The confidentiality obligations match the information being shared.
• The document protects both sides where necessary.
• The obligations are commercially workable for your business.
• It contains provisions that go beyond confidentiality.

A short NDA may look routine, but the commercial effect can be substantial. For example, a document described as an NDA may also contain an indemnity, IP rights, non-solicitation restrictions, or obligations that are not appropriate for a preliminary conversation.

Is the NDA one-way or mutual?

This is usually the first thing to check.

A one-way NDA applies when one party discloses confidential information, and the other party assumes confidentiality obligations.

A mutual NDA applies when both parties expect to disclose confidential information and both are bound by confidentiality obligations.

The key question is simple: Does the legal structure match what is actually happening?

For example:

• If only a potential client is sharing confidential material, a one-way NDA may make commercial sense.
• If both companies will exchange pricing, strategy, product information, technical materials or customer data, a one-way agreement may leave one side unprotected.
• If you expect to disclose sensitive material later, but the NDA only protects the other party’s information, you may need a mutual NDA or targeted amendments before sharing anything further.

What counts as confidential information?

The definition of confidential information is one of the most important parts of the NDA because it determines what the recipient is agreeing to protect.

Depending on the deal, confidential information may include:

• Written documents and correspondence
• Oral disclosures made in meetings, calls, or presentations
• Financial information and forecasts
• Pricing, margins and commercial terms
• Business plans and growth strategies
• Customer, client, supplier, or employee information
• Technical information, specifications, and product roadmaps
• Source code, software, and system architecture
• Designs, prototypes, inventions, and research
• Marketing plans and commercial strategies
• Information disclosed before the NDA was signed

If the NDA includes a broad definition, such as “all information disclosed by the other party”, it may still be valid. However, you should review it more closely to ensure realistic compliance with the obligations.

You should also check for standard exclusions. Confidentiality obligations don’t usually apply to information that:

• Is already public
• Was already lawfully known by the recipient
• Is independently developed
• Is received lawfully from another source
• Must be disclosed by law

These exclusions help ensure the NDA protects genuinely confidential material without imposing unrealistic obligations on the recipient.

What are you allowed to use the confidential information for?

An NDA should usually state when you can disclose and use information. Common purposes include:

• Assessing a proposed investment
• Evaluating a commercial partnership
• Quoting for services
• Carrying out due diligence
• Negotiating a supply or any other commercial arrangement
• Providing contracted services
• Evaluating a potential acquisition, sale, or joint venture

The permitted purpose matters because it determines what the recipient can actually do with the information.

You should also check that the scope is clear, sufficiently broad for work, but narrow enough to prevent unregulated use. Here is a practical example:

• Too narrow: “The recipient may only use the information to assess the proposal.”
• Too broad: “The recipient may use the information for business purposes.”

A better approach is to define the purpose more specifically. For example: “To evaluate, negotiate and, if agreed, perform the proposed managed services arrangement between the parties.”

Who are you allowed to share the information with?

You often need to share confidential information internally and with professional advisers. An NDA that prevents this entirely may be difficult to operate in practice.

Check whether you can disclose information to:

• Employees
• Directors and officers
• Contractors and consultants
• Accountants
• Lawyers
• Insurers
• Financiers
• Related companies
• Professional advisers
• Auditors or regulatory advisers

Then check the conditions that apply. For example:

• Must they genuinely need to know?
• Must they already be subject to confidentiality obligations?
• Are you responsible if one of those people breaches the NDA?
• Do you need the disclosing party’s written consent first?

It is common for NDAs to allow disclosure to representatives on a need-to-know basis, provided that appropriate confidentiality safeguards are in place. However, you should ensure the clause reflects how your business actually works.

How long do the confidentiality obligations last?

Confidentiality obligations may apply:

• For a fixed period
• Until the information becomes public through legitimate means
• For different periods, depending on the type of information
• Potentially indefinitely for highly sensitive material that remains genuinely secret

When reviewing duration, consider:

• The type of information is being protected
• How long it will remain commercially sensitive
• Whether the duration is proportionate
• Whether the obligation automatically ends if the information legitimately becomes public

Here’s a quick overview of reasonable duration depending on the information type, though specific situations will vary:

Are you agreeing to an indemnity?

An NDA indemnity clause is one of the most important NDA red flags to review carefully.

At a high level, an indemnity may require one party to compensate the other for specified losses arising from a breach of the NDA terms. In an NDA, this could mean the recipient agrees to reimburse the disclosing party for losses connected with unauthorised disclosure or misuse of confidential information.

Although indemnity clauses may appear in some NDAs, but not all are the same. Before signing the NDA, check:

• What events trigger the indemnity
• Whether it applies to any breach or only specified conduct
• What kinds of losses are covered
• Whether liability is capped
• Whether indirect or consequential loss is included
• Whether you are responsible for breaches by employees, contractors or advisers
• Whether the obligation is one-sided

An uncapped indemnity can make an NDA very risky, especially if you will receive sensitive data, technical information, personal information, or commercially valuable material.

Does the NDA contain an IP clause?

A basic NDA is primarily about confidentiality. However, some NDAs include IP clauses that can affect rights in:

• Existing intellectual property
• Feedback or suggestions
• Ideas discussed during negotiations
• Concepts created during workshops or demonstrations
• Improvements to products or processes
• New developments created during the relationship
• Materials created in response to confidential information

Review whether the document:

• Confirms that each party retains ownership of its existing IP.
• Grants a licence to use confidential information.
• Assigns intellectual property to the other party.
• Claims ownership of ideas developed during discussions.
• Gives the other party rights in feedback, concepts or improvements.
• Restricts your ability to use general knowledge, skills or experience gained during discussions.

Generally, IP would be dealt in more detail if the commercial relation proceeded to the stage of the parties entering into a commercial contract. However, if IP is involved at the NDA stage, the document isn’t just about confidentiality anymore. It may require separate negotiation under an IP assignment agreement, an IP licence, or a broader commercial contract.

Does the NDA include a non-compete, non-solicitation, or other restraint?

Confidentiality obligations and restraint clauses are different things. Some NDAs include terms that go beyond keeping information confidential.

These may restrict your business from:

• Working with competitors
• Approaching customers
• Hiring or soliciting employees
• Doing business in a particular market
• Developing competing products
• Contacting suppliers
• Providing similar services to other clients
• Dealing with parties introduced during the discussions

These clauses may be described as non-compete, non-solicitation, non-dealing, non-circumvention, or restraint provisions. Make sure to review them separately and with care.

Are there clauses that do not belong in a basic NDA?

An NDA should reflect the commercial relationship. Review carefully if the NDA contains:

• Broad indemnities
• Uncapped liability
• IP assignments
• Exclusivity
• Non-compete provisions
• Non-solicitation clauses
• Warranties unrelated to confidentiality
• Ownership of future ideas or developments
• Unusually broad audit rights
• Foreign governing law
• Obligations that are materially different for each party

Not all of these provisions are inappropriate. The point is to identify when the NDA is doing more than protecting confidential information.

If the document includes broader commercial terms, you may engage a lawyer to review the document before you sign.

What happens if there is a breach?

An NDA should explain the consequences of misusing or disclosing confidential information without authorisation.

Potential consequences of a breach may include:

• Injunctive relief, where a court order is sought to prevent further disclosure or use
• Damages for loss caused by a breach
• Indemnity obligations
• Contractual remedies
• Requirements to notify the other party of an actual or suspected breach
• Obligations to retrieve, contain, or delete disclosed information
• Requirements to cooperate with investigations or legal proceedings

You should understand both sides of the arrangement:

• What happens if your business breaches the NDA?
• What remedies are available if the other party breaches it?

If the NDA is mutual, check whether remedies are genuinely reciprocal.

What do you have to do when discussions end?

Many NDAs require the recipient to return or destroy confidential information when discussions end, upon request, or at the end of the agreement.

Check whether:

• Confidential information must be returned
• Electronic copies must be deleted
• Copies held by advisers must also be deleted
• Documents, notes and analyses based on the information are covered
• Information in backup systems must be destroyed
• You may keep an archival copy for legal, compliance or record-keeping purposes
• There is a deadline for the destruction process
• You must provide a written certificate of destruction

It may be difficult for many businesses to completely delete from all backup systems. A more workable clause may allow residual backup copies to remain until overwritten as long as they’re protected and not used.

You should ensure the wording reflects your actual systems. Signing an obligation your business can’t practically meet creates unnecessary risk.

Which law and jurisdiction apply?

The governing law clause states which legal system applies to the NDA. The jurisdiction clause identifies where disputes may need to be heard.

Check:

• Which law governs the agreement
• Which courts have jurisdiction
• Whether the other party is based overseas
• Whether disputes must be heard in another Australian state or territory
• Whether disputes must be heard in another country
• Whether the agreement requires arbitration or another dispute-resolution process

This becomes particularly important if an overseas investor, supplier, customer, or technology company has supplied its standard NDA.

Should you negotiate an NDA before signing it?

You certainly can. Receiving someone else’s standard NDA doesn’t mean the terms are non-negotiable.

Typical points that you can negotiate include:

• Mutual versus one-way structure
• The definition of confidential information
• Standard exclusions
• The permitted purpose
• NDA duration of confidentiality obligations
• Permitted recipients
• Return and destruction obligations
• Indemnity provisions
• Liability caps and exclusions
• IP clauses
• Governing law and jurisdiction
• Restraints, non-solicitation or non-circumvention provisions

Before pushing back, identify:

• What you genuinely cannot comply with?
• What creates disproportionate commercial risk?
• What does not match the proposed relationship?
• What needs clarification rather than deletion?
• What should be dealt with later in the main commercial agreement?

In many cases, a small number of focused amendments can make the NDA workable. However, extensively negotiating standard terms in an NDA can cause friction in the commercial relationship between the parties which is often in the beginning stages. Given this, it is important to keep negotiations to key deal breaker issues such as non-standard NDA clauses as outlined earlier in the article.

What if the other party refuses to use your NDA?

This is common and doesn’t necessarily indicate a problem.

A client, investor, vendor, or partner may insist on using its own document because it has an internal legal policy, approval process, or preferred template. If the other party insists on its NDA:

1. Review the agreement against the checklist in this article.
2. Compare the protections with what your business actually needs.
3. Identify one-sided, impractical or unrelated provisions.
4. Propose targeted amendments where necessary.
5. Avoid sharing sensitive information until an acceptable agreement is in place.

For example, some investors may have a policy against signing NDAs early on. You may simply need to be careful what you disclose before proper documentation is in place.

Can you sign the NDA now and negotiate the main contract later?

Often, yes. An NDA often protects discussions before the main commercial agreement is finalised. However, the NDA shouldn’t decide issues that are meant to be negotiated later, such as:

• IP ownership
• Exclusivity
• Service obligations
• Pricing
• Deliverables
• Liability allocation
• Ownership of jointly developed work
• Ongoing support, maintenance, or implementation obligations

Those issues should usually be addressed in the main commercial agreement, rather than embedded in a document presented as a preliminary NDA.

NDA review checklist before you sign

Use this checklist before signing someone else’s NDA.

• Is it one-way or mutual?
• Does that match who will disclose information?
• What exactly counts as confidential?
• Are reasonable exclusions included?
• What is the NDA’s permitted purpose?
• Who can receive the information?
• How long do obligations last?
• What must happen when discussions end?
• Is there an indemnity?
• Is liability capped?
• Are there IP ownership or licence provisions?
• Are there restraints or non-solicitation terms?
• What remedies apply for breach?
• Which law and jurisdiction apply?
• Can your business practically comply with every obligation?

When should you get an NDA reviewed by a lawyer?

A legal review may be particularly worthwhile if:

• The NDA contains an indemnity or uncapped liability.
• Significant intellectual property is being disclosed.
• The document includes restraints, exclusivity, or non-solicitation provisions.
• Large amounts of sensitive commercial information or customer data are involved.
• The other party is overseas.
• The NDA is materially one-sided.
• The proposed transaction is high-value.
• Your business can’t practically comply with the return, deletion, disclosure, or security obligations.
• You can’t confidently identify what rights or commercial restrictions you are accepting.

Hire a lawyer to help identify provisions that go beyond confidentiality, explain the practical risk, and suggest amendments that better match the transaction. For a commercially focused review, consider Lawpath’s contract review and legal advice service.

FAQs

Should I sign someone else’s NDA?

Potentially, yes. However, you should review whether the confidentiality structure, permitted purpose, risk allocation, and additional clauses are suitable before signing.

What should I check before signing an NDA?

Check whether it is one-way or mutual, what information is confidential, permitted uses, who can receive the information, how long obligations last, return or destruction requirements, indemnities, liability caps, IP clauses, restraints, remedies, and governing law.

Can you negotiate an NDA before signing?

Yes. NDAs are commonly negotiated, particularly when the supplied document is one-sided, operationally impractical, or includes provisions that extend beyond confidentiality.

Is a mutual NDA better than a one-way NDA?

Neither is automatically better. A mutual NDA is appropriate if both parties will disclose confidential information. A one-way NDA suits when only one party is disclosing sensitive information.

How long should an NDA last?

There is no universal duration. The appropriate period depends on the type of information, how long it remains commercially sensitive, and whether it qualifies as a trade secret or other highly confidential material.

Is an indemnity normal in an NDA?

An indemnity may appear in an NDA, but it should not be treated as automatic or standard. It can create significant financial exposure, particularly if it is uncapped, one-sided, or covers indirect loss.

Can an NDA transfer intellectual property rights?

It can, if the wording includes an IP assignment, licence, or ownership provision.

Can an NDA include a non-compete clause?

Yes, some NDAs include non-compete, non-solicitation, non-dealing, or non-circumvention clauses. These are broader commercial restrictions and should be reviewed separately from the confidentiality obligations.

What happens if I refuse to sign an NDA?

The other party may choose not to disclose sensitive information or may pause negotiations.

Should a lawyer review an NDA before I sign it?

Legal review is particularly sensible if the NDA involves valuable IP, sensitive data, an indemnity, uncapped liability, restraints, foreign governing law, a high-value opportunity, or obligations your business may struggle to meet operationally.