Confidentiality and NDA Clauses: What AI Contract Review Finds

An NDA is often the first contract two companies sign before discussing a potential deal. Despite appearing simple, it contains several clauses that deserve careful attention. Here is what SmartSplitAI checks in confidentiality agreements.

Scope of Confidential Information

The definition of what counts as confidential sets the boundaries of your obligations. A scope that is too broad — "all information disclosed, whether marked confidential or not" — can create unintended risk for the receiving party. SmartSplitAI highlights how the scope is defined and whether it is mutual or one-sided.

Duration of the Obligation

A perpetual confidentiality obligation is a permanent burden. The system checks whether the NDA specifies an end date for the confidentiality duty, and what happens to the information after that date. A typical term is three to five years from the date of disclosure, though trade secrets may be protected indefinitely.

Standard Exclusions

Well-drafted NDAs include standard exclusions: information that is already publicly available, independently developed by the receiver, or required to be disclosed by law or court order. SmartSplitAI verifies that these exclusions are present. Missing exclusions mean you could be liable for disclosing information that was already public.

Consequences of Breach

Some NDAs include liquidated damages or specific penalties for unauthorized disclosure. The system flags these provisions. Disproportionate penalties — such as unlimited liability for any disclosure, regardless of harm — deserve careful negotiation.

Return or Destruction of Information

What happens to confidential information when the NDA expires or the deal falls through? The contract should specify whether the receiving party must return or destroy the information, and whether copies may be retained for legal or regulatory compliance. SmartSplitAI finds these provisions and highlights any gaps.