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An NDA review checklist is a fixed set of questions you ask of every non-disclosure agreement before a data room opens or a model changes hands. On an Indian deal, the questions that move the risk are who owes the duty, how confidential information is defined, whether the four usual carve-outs are actually there, how long the duty survives, and whether a restraint of trade has been written into the boilerplate.
This note is for transactional lawyers and in-house counsel doing that first pass: a fundraise, a vendor onboarding, a joint study, a buyer looking at a company. It is a review list, not advice on any particular draft. The wider contract-review method, including how a playbook sits next to a tracked-change turn, is [LINK: ai-contract-review-india].
Key takeaways
- Decide mutual or unilateral before you edit anything else. The wrong direction makes every later clause sit on the wrong party.
- A definition that covers only documents marked "Confidential" drops the unmarked files in a data room.
- The four carve-outs are public domain, prior possession, independent development and a clean third-party source. Missing one is a red flag. A carve-out that swallows the disclosing party's own breach is a worse one.
- Read any non-solicit or non-compete against Section 27 of the Indian Contract Act, 1872. Confidentiality and a restraint of trade are different promises.
- Stamp the NDA for the state of execution. A rate copied from another state is how these documents get held up later.
What does an NDA review checklist decide?#
It decides whether this draft can be signed for this purpose, and what you will mark up if it cannot. Check that the party who will receive the information is the party under the duty, that the information you are about to share is inside the definition, and that the recipient can still obey the clause when a regulator, a court or a backup tape gets in the way.
Keep a one-line purpose at the top of the review note, in your own words: "XYZ Advisors LLP will see ABC Private Limited's draft accounts, solely to decide whether to invest." ABC Private Limited and XYZ Advisors LLP are dummy names in this article. They are not real parties, and the clauses below are illustrations, not a precedent.
If the purpose is a share purchase, the NDA is only the front door. The agreement that actually moves the shares is a different review: [LINK: spa-review-checklist]. If the conversation is already about board seats, transfer restrictions and exit, you are in shareholders' agreement territory: [LINK: shareholders-agreement-key-clauses].
What belongs on an NDA review checklist?#
Fifteen clauses cover a standard Indian transaction NDA. Nine of them are the columns in Scafffold's built-in NDA Review workflow. The other six are yours to read: purpose, compelled disclosure, restraint, intellectual property, stamp and execution, and the boilerplate that widens the deal.
| Clause | What to look for | Red flag | NDA Review column |
|---|---|---|---|
| 1. Direction | Who owes the duty. Mutual means both sides. Unilateral means one side. Use the legal names. | The duty sits on the party opening the data room, or a mutual draft is used where only one side will share. | Direction (Mutual or Unilateral) |
| 2. Purpose | A permitted use: an investment, a supply, a hire, a joint project. Use limited to that purpose. | "Any purpose", or no purpose. A purpose wide enough to include soliciting customers. | No column. Non-use for the purpose sits under Obligations of Receiving Party. |
| 3. Definition | What is covered, whether marking is required, and how oral information is confirmed. | Only documents marked "Confidential", so unmarked data-room files fall out. | Definition of Confidential Information |
| 4. Obligations | Keep it confidential, do not disclose it, use it only for the purpose, a standard of care, and need-to-know access. | A bare "keep confidential" line, with no non-use promise and no limit on who may see the file. | Obligations of Receiving Party |
| 5. Carve-outs | Public other than by breach; already held; independently developed; received from a third party free to give it. | One of the four is missing, or the public-domain limb still applies when the recipient caused the leak. | Standard Carveouts Present? |
| 6. Permitted disclosures | Employees, advisers, affiliates, financiers, regulators, each bound by an equivalent duty. | Affiliates or lenders are named, and nobody has to bind them. | Permitted Disclosures |
| 7. Compelled disclosure | Notice where lawful, disclosure limited to what the order requires, help with a protective order. | An absolute ban the recipient cannot obey, or a right to hand over the whole file with no notice. | Read it yourself. It often sits inside Permitted Disclosures. |
| 8. Term and survival | How long the contract runs, and how long the duty lasts after it ends. | The duty dies when the NDA ends. Or "perpetual", with no split between ordinary information and what is still secret. | Term and Duration |
| 9. Return and destruction | Return or destroy, a certificate if you need one, and exceptions for backups, legal holds and an adviser's retained copy. | "Return every copy, including backups", which cannot be performed. | Return and Destruction |
| 10. Remedies | Whether damages are said to be inadequate, and whether an injunction may be sought. Any named sum. | A cap that treats a leak like a late invoice. A figure such as ₹5,00,000 (5 lakh) that nobody has tied to a loss. That figure is an illustration. | Remedies |
| 11. Restraints | Any non-hire, non-solicit or non-compete: activity, geography, duration. | A non-compete that stops the other party carrying on business. A non-solicit of every employee, for years, after one meeting. | No column. Read it against Section 27. |
| 12. IP and residuals | The discloser keeps its IP. No licence beyond the purpose. Any residuals wording. | A residuals clause on a technology NDA, or an assignment of improvements to the recipient. | No column. |
| 13. Law and disputes | Governing law, courts or arbitration, exclusive or not. For arbitration: seat, rules, number of arbitrators. | Foreign law on a domestic exchange, with no reason on the file. A clause that tries to shut out courts. A blank seat. | Governing Law and Jurisdiction |
| 14. Stamp and execution | State of execution, article, who pays, names on the stamp paper matching the parties clause, authority of the signatory. | A brand name instead of the company. No stamp, or a stamp bought for another state. | No column. Check the original. |
| 15. Assignment and notices | Consent to assign, any affiliate or financing carve-out, notice addresses that will be read, how amendments must be made. | Free assignment, so the information can move to a competitor. Notice only by post to an old address. | No column. |
Clauses 1, 3, 4, 5, 6, 8, 9, 10 and 13 are the workflow. Clauses 2, 7, 11, 12, 14 and 15 are the rest of the pass.
How do you read a definition clause? A worked example#
The parties below are dummy names. They are not real.
"Confidential Information" means all information relating to the Purpose that ABC Private Limited discloses to XYZ Advisors LLP, in any form, whether or not it is marked confidential, together with notes prepared from that information.
Direction. ABC discloses and XYZ receives. If the rest of the draft matches this sentence, the NDA is unilateral. If XYZ will also send its own memorandum, this sentence does not cover it. Write Unilateral, and name both parties. That is the Direction column.
Purpose. The clause uses "the Purpose" and does not define it. "Evaluating a possible investment in ABC Private Limited" can hold a non-use promise. "Business discussions" is the row 2 red flag.
Definition. Coverage is broad: any form, no marking, notes included. The clause to mark up is the other shape, also dummy:
"Confidential Information" means information which is marked "Confidential" at the time of disclosure.
A financial model uploaded with no legend falls out of that sentence. Ask for the first formulation, or for a line that deems the contents of the room confidential.
Carve-outs. The first clause has none. Standard Carveouts Present? is No. A set that does the job is:
Confidential Information does not include information that: (a) is or becomes public other than by a breach of this Agreement; (b) was already in the Receiving Party's lawful possession, without a duty of confidence; (c) is developed independently without use of Confidential Information; or (d) is received from a third party who is not, so far as the Receiving Party knows, bound by a duty of confidence.
Limb (a) fails if it omits "other than by a breach". The recipient can then leak the file and claim the carve-out. Limb (c) needs "without use". The one-line note: unilateral; ABC to XYZ; definition broad; carve-outs absent; do not sign until (a) to (d) are in.
Which NDA clauses are the red flags?#
The duty is on the wrong side. Read Disclosing Party and Receiving Party against the signature blocks. A form that calls itself mutual, then puts every promise on "the Receiving Party", is unilateral in operation.
There is no non-use covenant. A promise not to disclose still leaves the recipient free to use the information. Row 4 asks for use limited to the purpose. The worked example above is the companion point: a public-domain carve-out with no "other than by breach", and a residuals clause, both let the recipient keep the benefit of the leak.
The duty ends when the paper ends. Termination on short notice, with no survival, lets either side switch the duty off. Write the term of the contract and the survival of confidentiality as two clocks.
A restraint is sitting in the boilerplate. "You shall not engage in a competing business for three years" is a restraint of trade. Put Section 27 next to it, and next to any non-solicit of every employee, with no link to who saw the information.
A named sum in the remedies clause is the next flag when nobody can say what it corresponds to. Indemnity wording in that clause, and any cap on top of it, is [LINK: limitation-of-liability-indemnity].
What does Indian law change in this review?#
Three sections of the Indian Contract Act, 1872 come up on ordinary NDAs. The text is the India Code PDF of the Indian Contract Act, 1872. Stamp duty is separate, and it is state law.
Section 27: restraint of trade#
Section 27 says that every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind is, to that extent, void. The exception is a sale of goodwill, within local limits that appear reasonable to the court, while the buyer or a successor carries on the business.
An NDA is not a sale of goodwill. Record the activity, the geography and the duration of any non-compete or non-solicit. A promise not to disclose, and not to use the information except for the purpose, is a different promise from a promise not to carry on a business. [VERIFY: the cases that draw that line, including on employee non-solicits. Add no case name until the report and an Indian Kanoon link are on the file.]
The employment version, where the restraint binds an individual, is [LINK: employment-agreement-review-india].
Section 74: a named sum on breach#
Where the contract names a sum payable on breach, or contains any other stipulation by way of penalty, Section 74 entitles the complaining party to reasonable compensation not exceeding that sum, whether or not actual damage is proved. Write the figure with its currency, for example ₹5,00,000 (5 lakh), and note whether injunctions survive and whether a cap sits on top. [VERIFY: current authority on Section 74, with an Indian Kanoon link, before this is published as an account of how courts apply the section.]
Section 28: shutting out the courts#
Section 28 makes an agreement void to the extent it absolutely restricts a party from enforcing contractual rights in the ordinary tribunals, or limits the time for doing so. It also covers agreements that extinguish rights on the expiry of a period so as to restrict enforcement. Exception 1 saves a contract to refer future disputes to arbitration. Exception 2 saves a written reference of questions that have already arisen.
A clause that bars the courts, and does not go to arbitration, is the clause the section describes. An arbitration clause should still name the seat, the rules and the number of arbitrators. A choice of one city's courts is a different sentence from an absolute bar. [VERIFY: the cases on exclusive jurisdiction clauses that choose one competent Indian court, with an Indian Kanoon link.]
The India Code PDF still footnotes the Arbitration Act, 1940. The arbitration statute now in force is the Arbitration and Conciliation Act, 1996. [VERIFY: the India Code link for the 1996 Act, and that the Contract Act footnote is still unrevised.]
Stamp and signing#
Whether an NDA attracts duty, under which article, and for what amount, depends on the Indian Stamp Act, 1899 as amended in the state of execution. Schedules differ, so put no rupee figure in a playbook until that article is opened. Match the name on the stamp or e-stamp certificate to the parties clause, and match the signatory to someone who can bind the entity. [VERIFY: the article for an NDA in the states the firm uses, the effect of non-stamping, and the India Code or gazette links.]
Running this review in Scafffold#
The built-in workflow is NDA Review, a tabular review: the same questions go to every NDA in the set. The columns are Direction (Mutual or Unilateral), Definition of Confidential Information, Obligations of Receiving Party, Standard Carveouts Present?, Permitted Disclosures, Term and Duration, Return and Destruction, Remedies, and Governing Law and Jurisdiction. The carve-out column asks whether all four are present, and for a note when one is missing or worded differently.
Add the NDA and any side letter that changes it. Each document is a row. Each cell cites the passage it used, so you can open that page before you rely on the cell. Export the grid to Excel for the matter file, and check the citations on screen first. The export carries the answers.
Stamp, Section 27, residuals and assignment are rows 11, 12, 14 and 15, and they are not columns in NDA Review. Put them on a tabular workflow you create, and share that workflow by email with named colleagues. You can run NDA Review from a Scafffold account. The grid is the first pass.
Sources#
- The Indian Contract Act, 1872 (Sections 27, 28 and 74), India Code PDF, linked in the section above. Checked on 8 October 2026. Open points are marked [VERIFY].
FAQ
- What is the difference between a mutual and a unilateral NDA?
- A mutual NDA puts confidentiality duties on both sides. A unilateral NDA puts them on the recipient only. Use a mutual form when both sides will share information. Use a unilateral form when only one side is opening its records, such as a buyer entering a data room.
- How long should confidentiality last?
- There is no statutory default. The NDA should state how long the contract runs and how long the duty survives expiry. On many Indian transaction NDAs the survival period is two or three years, with a longer tail for information that is still secret. The number is a commercial choice.
- Is a non-compete in an Indian NDA enforceable?
- Section 27 of the Indian Contract Act, 1872 provides that an agreement restraining anyone from a lawful profession, trade or business is void to that extent, subject to the goodwill exception. A non-compete buried in an NDA falls under that section. How a narrow non-solicit is treated is for the reviewer to confirm against the cases.
- Does an NDA have to be stamped?
- Stamp duty follows the state where the NDA is executed, under the Indian Stamp Act, 1899 as amended by that state. Confirm the article and the amount before anyone signs. Do not copy a rate from another state's schedule.
- What does Scafffold's NDA Review workflow extract?
- NDA Review is a tabular workflow. Its columns are direction, definition of confidential information, the recipient's obligations, standard carve-outs, permitted disclosures, term, return and destruction, remedies, and governing law and jurisdiction. Each cell cites the passage it used. The grid exports to Excel.
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AI Contract Review: A Practical Playbook for Indian Legal Teams
AI contract review is a cited first pass over the clauses, not a judgement on risk. This playbook is the checklist Indian legal teams can run.
This article is general information about Indian law and legal practice, current as of the "Updated" date above. It is not legal advice. Scafffold is a software company, not a law firm.