Perpetual NDA / Confidentiality Term Clause
Most confidentiality obligations should run three to five years, with an indefinite term only for genuine trade secrets. A perpetual, one-sided NDA with fixed liquidated damages is a disproportionate risk to carry.
What it means in plain English
An NDA protects information that is actually confidential. The trap is a one-way obligation with no end date, no standard exceptions, and a pre-agreed damages number that applies regardless of any real loss.
Why it is risky
- Forever obligations are impossible to manage across a career.
- One-sided NDAs bind you while the other party shares your information freely.
- Missing exceptions (public knowledge, independent development, legal compulsion) make breach almost unavoidable.
- Liquidated damages clauses fix a penalty that has no link to actual harm.
Red-flag wording to look for
- "The confidentiality obligations herein shall survive in perpetuity."
- "The Receiving Party shall pay liquidated damages of ₹10,00,000 for each breach, without proof of loss."
- "All information disclosed, whether or not marked confidential, shall be deemed Confidential Information."
What fair wording looks like: Mutual obligations, a defined term of three to five years (indefinite only for trade secrets), standard exceptions, and damages proved rather than pre-fixed.
Recommended counter-clause
Replace the risky clause with this wording. Square brackets are the numbers to agree.
Each party's confidentiality obligations under this Agreement are mutual and shall continue for [three (3)] years from the date of disclosure, save that obligations in respect of trade secrets shall continue for so long as the information remains a trade secret. Confidential Information does not include information that (a) is or becomes publicly available other than through breach of this Agreement, (b) was known to the Receiving Party before disclosure, (c) is independently developed without use of the Confidential Information, or (d) is required to be disclosed by law or a regulator, provided reasonable notice is given where lawful. Remedies for breach shall be limited to damages actually proved and, where appropriate, injunctive relief.
Hi [Name], happy to sign the NDA. Could we make it mutual, set the term at three years with trade secrets carved out as indefinite, and add the standard exceptions for public information and independent development? I'd also prefer damages be proved rather than fixed in advance.
General information, not legal advice. Wording should be adapted to your contract and jurisdiction.
Frequently asked questions
- How long should an NDA last?
- Three to five years from disclosure is the market standard for commercial information. Genuine trade secrets can be protected for as long as they remain secret, but that should be a narrow carve-out, not the whole clause.
- Are liquidated damages in an NDA enforceable?
- A pre-fixed sum unconnected to actual loss looks like a penalty and is often reduced or refused. Damages actually proved, plus injunctive relief, is the balanced position.
- Should an NDA be mutual?
- Whenever both sides share information, yes. A one-way NDA in a two-way conversation is the clearest sign the document was drafted for one party's benefit only.
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