NDA Review in Australia: Scope, Term, Carve-Outs, Return of Materials

NDAs (non-disclosure agreements, also called confidentiality agreements) are the most-signed and least-read commercial contracts in Australia. Most look like generic boilerplate. Most have at least one clause that, if breached, exposes the signing party to substantial damages — often calculated as liquidated damages of $50,000+ per breach, or actual loss with no cap.

Before signing an NDA — particularly one given to you by a counterparty rather than one you’ve drafted — the contract review needs to check four things: scope, term, carve-outs, and post-term obligations.

The clauses that matter most

• Definition of Confidential Information. Narrow (“information marked CONFIDENTIAL in writing”) or broad (“any information of any kind disclosed in any form”)? Broad definitions catch information you didn’t realise was confidential and create breach risk for ordinary business conversations.
• Term. How long does confidentiality survive? 3 years, 5 years, indefinite? Australian courts are reluctant to enforce indefinite confidentiality except for true trade secrets — but you’ll spend money in court establishing that.
• Permitted purposes. What can you do with the information? “Evaluation purposes only” is restrictive — using the information to improve your own products may breach. Push for permitted use language matching your actual business need.
• Carve-outs. Information that ISN’T confidential — already in the public domain, independently developed by you, lawfully obtained from third parties, required to be disclosed by law or regulator. Without proper carve-outs, you breach the NDA simply by using information you already had.
• Return or destruction obligations. At end of term or on request, must you return all materials, destroy electronic copies, certify destruction in writing? Backup tapes, cloud archives, and forwarded emails make full destruction practically impossible — make sure the obligation is “reasonable endeavours” not absolute.
• Mutual or one-way. If you’re disclosing as well as receiving, the NDA should be mutual. One-way NDAs from the counterparty leave you exposed while they’re protected.
• Liquidated damages. Some NDAs specify damages on breach — $50,000, $100,000, or “10x the value of the deal”. These are penalty clauses and often unenforceable, but you’ll fight that battle in court.
• Restraint of trade. Watch for non-compete or non-solicitation provisions hidden inside an NDA — particularly when reviewing acquisition or partnership opportunities.

Common red flags

• Indefinite term with no review or release mechanism
• “All information” definition with no marking requirement
• No standard carve-outs for already-known or independently-developed information
• Injunctive relief without bond — counterparty can shut down your operations on application without posting security
• Indemnification of legal costs on any breach (even minor)
• Choice of foreign law in an NDA between Australian parties
• “Affiliates” definition extending obligations to entities you don’t control

What Claim Done’s contract review delivers

Upload the NDA. The review returns an A4 PDF flagging scope breadth, term length, missing carve-outs, return obligation feasibility, and any hidden restraints. The report sets out good, fair and watch points, key obligations, fees and penalties found, and questions to raise with the other side. Flat $49 fee, 24/7.

The mutual NDA rewrite

If a counterparty hands you a one-way NDA (you receive their information and owe obligations; they don’t owe anything in return), the cleanest and fastest fix is to ask for it to be made mutual. Most counterparties accept this without negotiation because it costs them nothing — they assume they won’t be disclosing anything material. But the moment information starts flowing in your direction (commercial terms, future plans, technical specifications), the mutual NDA gives you reciprocal protection. The drafting change is minimal — typically swapping defined terms “Discloser” and “Recipient” for “Disclosing Party” and “Receiving Party” and noting that either party may take either role from time to time. Two minutes of redrafting prevents a year of asymmetric exposure. This single change is the highest-value NDA improvement most businesses can make.