You know that moment in every legal drama where a character confidently signs a contract without reading it, only to regret it when the fine print comes back to haunt them? Well, that’s real life when it comes to Non-Disclosure Agreements (NDAs).

At first glance, it seems simple enough—don’t share confidential information, and everyone stays happy. But hidden in the fine print could be clauses that restrict your future work, trap you in indefinite secrecy, or impose unfair penalties for even accidental breaches.

So before you sign away your ability to discuss your own business (or worse, realize you’ve agreed to something ridiculous like never working in your industry again), let’s go over exactly how to sign an NDA the right way so you stay protected and in control.

What is an NDA?

A Non-Disclosure Agreement (NDA), also called a confidentiality agreement, is a legally binding contract that prevents sensitive information from being shared with unauthorized parties. Businesses, startups, and individuals use NDAs to protect trade secrets, proprietary data, and confidential business strategies.

Also read: The Ultimate Guide to NDAs

Is an NDA the same as a confidentiality agreement?

Yes and no. While both protect sensitive information, NDAs focus specifically on non-disclosure, while confidentiality agreements (CAs) can cover broader legal obligations like compliance, ethical conduct, or intellectual property rights.

Source : NDA vs Confidentiality Agreement 

When to use each

• Use an NDA when: Sharing business-sensitive or proprietary info (e.g., trade secrets, investor pitches)
• Use a CA when: Confidentiality is part of a broader agreement (e.g., vendor contracts, employee agreements in regulated industries)

Also read: NDA vs. Confidentiality Agreement

What to look for before signing an NDA?

NDAs might all look the same at first glance, but the details can make or break your legal protection. Some agreements overreach, some leave loopholes, and others are just plain unclear. Before you sign, make sure you’re not walking into a legal trap. 

Here’s what to watch for: 

#1 Confidential information: What’s actually protected?

This clause defines what’s off-limits—what the receiving party can’t disclose or use without permission. If this section is too vague, you might not be as protected as you think. If it’s too broad, you could be agreeing to keep things secret that shouldn’t be confidential in the first place.

• Why it’s important: 
  
  • Keeps both parties on the same page about what’s protected
  • Prevents loopholes that could lead to legal headaches later
    
• What to look for: 
  
  • Ensure the definition is clear and specific. Recheck that it lists categories like trade secrets, business plans, software code, financials, customer lists, and marketing strategies
  • Does it cover both written and verbal disclosures? If verbal disclosures aren’t mentioned, they may not be protected
  • Does it include information mutually agreed upon before the NDA was signed? If not, prior discussions may not be covered

Tip: If you're sharing highly sensitive data, request an appendix or schedule that lists exactly what’s covered.

#2 Obligation of parties: How should confidential information be handled?

This section of the NDA defines how the receiving party must handle confidential information, ensuring it is not misused, shared too broadly, or inadvertently exposed. A well-drafted obligations clause provides clear expectations and enforceable standards, reducing the risk of accidental disclosure.

• Why it’s important: Without a clear use restriction, confidential information might be shared more broadly than intended
• What to look for: 
  
  • Does the NDA limit the use of confidential information only for the intended purpose?
  • Are there restrictions on sharing information internally within an organization?
  • Does it require reasonable security measures to prevent unauthorized access?

Tip: An NDA should set reasonable and enforceable expectations. Clauses that require absolute security or indefinite confidentiality can be impractical and difficult to enforce.

#3 Exclusion from confidentiality: What’s not covered?

Not everything can or should be classified as confidential. The exclusions clause in an NDA defines what information is not subject to confidentiality obligations, ensuring the agreement remains reasonable and enforceable.

• Why it’s important: It prevents the NDA from being overly restrictive and ensures fairness
• What to look for: 
  
  • Information that is already publicly available or becomes public through no fault of the receiving party
  • Information that the receiving party already knew before signing the NDA
  • Information that is independently developed without using the disclosed confidential information
  • Information disclosed due to a legal requirement (e.g., a court order)

Tip: Clarity matters. Ambiguity in exclusions can lead to disputes. Ensure the NDA clearly defines what is not confidential to prevent misinterpretation or unfair restrictions.

#4 Duration of confidentiality: How long does the NDA last?

NDAs aren’t permanent, and this clause determines how long confidentiality obligations remain in effect. Without a clear duration, you could be stuck under unnecessary restrictions indefinitely—or worse, left unprotected if the agreement expires too soon.

• Why it’s important: It sets a clear timeline for how long the information must be protected, balancing the need for security with practicality
• What to look for: 
  
  • How long does the NDA last? The duration can vary widely, from a few months to several years, depending on the nature of the information
  • Trade secrets may require longer protection, while general business discussions might only need short-term confidentiality
  • Ensure the agreement clearly states when obligations expire (e.g., "5 years from the signing date" or "3 years after termination of the business relationship")

Tip: Avoid overly long durations that might be difficult to enforce or unnecessarily restrictive.

#5 Consequences of breach: What happens if someone violates the NDA?

An NDA only works if there are consequences for breaking it. The breach clause lays out what happens if someone discloses or misuses confidential information, giving the disclosing party legal options to protect their interests.

• Why it’s important: It provides a clear course of action if the agreement is breached, protecting the disclosing party’s interests
• What to look for: 
  
  • Does the agreement allow for injunctive relief (a court order to stop the violation immediately)?
  • Can the violating party be required to pay damages for losses caused by the breach?
  • Does it specify a jurisdiction (which state/country’s laws will apply if there’s a dispute)?‍
    

Tip: Ensure the consequences are proportionate to the potential harm caused by a breach

Also read: Five Things to Look For in an NDA

Best practices to sign an NDA online

Gone are the days of printing, signing, scanning, and emailing back NDAs. Today, signing an NDA online is faster, more secure, and legally binding. But before you click "Sign", here’s what you need to know to ensure your NDA is properly executed and enforceable.

#1 Use a secure, legally compliant eSignature Tool

Not all eSignatures are created equal. Some tools just slap a digital scribble on a PDF, while others provide legally binding signatures that hold up in court.

“Now is the perfect time for in-house counsel to focus on how best to use electronic signatures at your company. If you are already using them, that’s even better, but just make sure you are truly up-to-speed on the laws in your jurisdiction and that you have the right systems and procedures in place.”

~ Sterling Miller CEO and Senior Counsel for Hilgers Graben PLLC
‍Ten Things: Electronic Signatures (What In-House Counsel Need To Know)

What you need: 

• A trusted eSignature platform: SpotDraft (AI-powered & built for contracts), DocuSign, or Adobe Sign
• Legal compliance: Ensure the platform complies with eSignature laws such as the U.S. E-SIGN Act, UETA, and EU eIDAS Regulation to make your NDA enforceable
• An audit trail: The platform should track timestamps and IP addresses, and prevent unauthorized edits

Pro tip: Using SpotDraft, you can sign, track, and manage NDAs without the back-and-forth hassle.

Also read: How to eSign Agreements Efficiently with SpotDraft 

#2 Read the NDA carefully before clicking “Sign”

Yes, it’s tempting to skim and just click "Accept," but this is a legally binding document. Missing a small detail now could cause problems later.

What to check before signing: 

• Review key clauses: Check confidentiality definitions, duration, exclusions, and liability terms
• Confirm the signer’s identity: Ensure both parties are correctly named and authorized to sign
• Look for pre-filled details: Double-check company names, dates, and contract terms for accuracy

Pro tip: Let SpotDraft’s AI-powered contract review, VerifAI, do the heavy lifting and flag risky clauses for you.

#3  Ensure an audit trail and document integrity

If a dispute ever arises, you’ll want proof that the NDA was signed properly and hasn’t been altered. A good eSignature platform should: 

• Capture timestamps and IP addresses: Provides proof of when and where the contract was signed
• Prevent unauthorized changes: Once signed, the document should be locked from edits
• Provide a verification log: This helps validate authenticity in case of disputes

#4  Securely store and track your NDA

Signing is just the beginning—keeping track of the NDA is equally important. Use a cloud-based storage solution to: 

• Keep all signed NDA in one place: No more searching through endless email threads
• Set expiration reminders: NDAs aren’t forever; get notified when confidentiality obligations expire
• Control access: Ensure only authorized personnel can retrieve the NDA when needed

Also read: Clickwrap NDA: Everything You Need to Know

Top online tools for signing NDAs

#1 SpotDraft

More than just an eSignature tool, SpotDraft offers AI-powered contract review, automated contract tracking, and secure storage, making it the best choice for businesses managing legal agreements.

#2 DocuSign

DocuSign is a widely used eSignature platform that ensures legally binding agreements with audit trails, encryption, and global compliance support.

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#3 Adobe Acrobat Sign

Part of the Adobe ecosystem, Acrobat Sign offers seamless document signing, integrations with Microsoft tools, and mobile-friendly execution.

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#4 Dropbox Sign

Dropbox Sign is a user-friendly eSignature tool great for small businesses, allowing easy signing, tracking, and integration with Dropbox.

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#5 SignNow

SignNow is a budget-friendly alternative with customizable templates, team collaboration features, and mobile-friendly signing.

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Common mistakes to avoid when signing an NDA

Signing an NDA may feel like a routine step, but treating it as just paperwork can lead to serious legal and business risks. Many people overlook hidden clauses, unclear terms, or unfair obligations—only to realize the consequences later. 

Here’s what to watch out for and how to avoid costly mistakes.

#1 Ignoring the fine print

Hidden clauses can limit your rights, impose penalties, or include unfair terms like non-competes or data-sharing rules.

Read carefully or use an AI contract review tool to spot red flags and risky terms. 

Risky clauses and red flags in NDAs

• Overbroad confidentiality: If “Confidential Information” includes everything, you might be stuck keeping secrets forever
• Uncapped liability: Accidental breaches shouldn’t bankrupt you. Check for unreasonable penalties
• One-sided indemnification: Don’t let them shift all the legal risk onto you
• Sneaky non-competes: Some NDAs restrict future deals with competitors. Read the fine print
• Unfair dispute resolution: Arbitration in their home state? Hard pass
• IP grab: NDAs protect secrets, not transfer ownership of your ideas

Also read: How to Review NDAs: A Comprehensive Guide

#2 Agreeing to an indefinite NDA

Some NDAs last forever, restricting you even after the business relationship ends.

Ensure that the NDA has a clear expiration date—typically 1–5 years, depending on the nature of the information. 

#3 Failing to clarify exclusions

Some NDAs wrongly cover public or pre-existing information. You might be forced to keep common knowledge confidential.

Ensure the NDA excludes public, prior, and independently developed information

#4 Ignoring governing law

NDAs often specify which country’s or state’s laws will apply if a legal dispute arises. If the governing law is based in an unfamiliar jurisdiction, enforcing the NDA or resolving conflicts could become complicated and costly.

Always check the governing law clause. If it points to a legal system you’re unfamiliar with, negotiate to change for a jurisdiction you are comfortable with.

Also read: How to Review Non-Disclosure Agreements (NDAs): A Comprehensive Guide 

Sign smart, stay protected

Signing an NDA is your first line of defense in protecting confidential business information. But an NDA is only as good as how well it’s reviewed, negotiated, signed, and stored.

You’ve now got the complete guide to signing an NDA the right way—from spotting risky clauses to negotiating fair terms. But even after you’ve signed, how you store and manage your NDA matters just as much as what’s in it.

“Think about how many contracts sit on someone’s laptop or in multiple databases and then think about the value of contract management. The importance of simply being able to locate all of the company’s contracts and relevant amendments in one place without significant effort cannot be minimized.”

‍~ Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC
Minimizing Risk in Commercial Contracts

That’s where SpotDraft comes in.

• Secure & legally binding eSignatures: No more lost contracts or delays—sign NDAs effortlessly and ensure compliance
• Automated NDA tracking and reminders: Never miss an expiration date or confidentiality obligations
• AI-powered contract review: Spot vague clauses, unfair terms, and enforceability risks before you sign
• Centralized contract storage: Easily access, update, and enforce NDAs with one-click retrieval

An NDA should protect you—not create unnecessary risk. SpotDraft makes signing, storing, and tracking NDAs seamless, secure, and legally compliant.

Want to sign NDAs with confidence? 

Try SpotDraft’s eSignatures

Frequently Asked Questions (FAQs)

1. What is a non-disclosure agreement (NDA)?

An NDA (Non-Disclosure Agreement) is a legally binding contract that prevents one or more parties from sharing confidential information with others. Businesses use NDAs to protect trade secrets, business strategies, and proprietary data when working with employees, investors, vendors, or partners.

2. What types of information can be protected by an NDA?

NDAs cover a wide range of confidential information, including: 

• Trade secrets:  Proprietary formulas, algorithms, or unique business processes
• Financial data:  Revenue reports, profit margins, or investment details
• Client and vendor lists:  Sensitive business relationships and agreements
• Intellectual property:  Software code, product designs, or patents
• Business strategies: Expansion plans, pricing models, or marketing strategies
  

3. How long does an NDA last?

The duration of an NDA depends on the terms outlined in the agreement: 

• Standard NDAs last 1–5 years, depending on the sensitivity of the information
• Trade secret NDAs may have indefinite confidentiality obligations, meaning the recipient must protect the information as long as it remains a trade secret
• Some NDAs expire when a business deal or project is completed
  

4. Can an NDA be terminated?

Yes, but termination depends on the NDA’s terms. Some NDAs expire automatically after a set period, while others require formal termination through mutual agreement or specific conditions outlined in the contract.

5. Does confidentiality always end with termination?

Not always. Some NDAs contain a survival clause, meaning confidentiality obligations continue even after termination. This is common for trade secrets or highly sensitive business information. Always check if certain obligations remain in effect after the contract ends.

6. Can I back out of an NDA after signing?

Generally, no—an NDA is a legally binding agreement once signed. However, you may be able to exit if: 

• Both parties mutually agree to cancel it
• The NDA includes a termination clause allowing early exit
• The contract is found unenforceable (e.g., overly broad restrictions)

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