What should be in an Australian NDA — clause by clause

A potential investor has emailed across a three-page NDA the day before your pitch, or a supplier has asked you to sign theirs before they will quote, or you have pulled a template off your own drive to send to a contractor and you are wondering whether half the clauses still make sense. Most NDAs you encounter look interchangeable on the surface, and most are not.

An NDA is a contract that controls how one party can use information the other has shared. It does not transfer ownership of anything, it does not guarantee a deal will follow, and it does not replace the confidentiality terms you will later need inside an employment contract, services agreement, or shareholders agreement. It is a holding pattern for the exchange of information while you work out whether there is a transaction worth doing.

The definition of confidential information

This is the clause that does the most work and is most often drafted badly. If the definition is too narrow, useful information leaks out from underneath it. If it is too broad — "any information disclosed by the Discloser" — a court may treat it as unreasonable and read it down, or you will find yourself trying to enforce it against information that was never sensitive to begin with.

A workable definition usually combines two elements: a category list (financial information, customer data, product designs, source code, pricing, business plans) and a marking or context test (information marked confidential, or that a reasonable person would understand to be confidential from the circumstances of disclosure).

Watch for definitions that include "all information disclosed before or after the date of this agreement" without limit — that pulls in past disclosures you may not remember.
Watch for definitions tied only to written, marked documents — verbal disclosures during a pitch will fall outside.

Permitted purpose

The other half of the definition problem. The permitted purpose is the only thing the receiving party is allowed to use the information for. "Evaluating a potential investment in the Discloser" is a permitted purpose. "Any lawful purpose" is not — it neuters the agreement.

Draft the purpose narrowly and tie it to the actual transaction being explored. If the deal shape changes, vary the NDA rather than relying on a loose purpose to stretch.

Exclusions from confidentiality

Standard carve-outs that should be in every NDA, because without them the clause will catch information it was never meant to:

Information already in the public domain at the time of disclosure, or that enters the public domain later through no fault of the receiving party.
Information the receiving party already had, evidenced by their records, before disclosure.
Information independently developed by the receiving party without reference to the confidential information.
Information lawfully received from a third party not bound by confidentiality.

The trap here is the burden of proof. A receiving party who wants to rely on "we already had this" needs records to show it. The discloser should not accept an exclusion that flips the burden onto them.

Permitted disclosures

Even a disciplined receiving party will need to share the information with their lawyers, accountants, and certain employees. The clause should permit that, but only to people who need to know for the permitted purpose, and only where those people are themselves under confidentiality obligations — either by employment, professional duty, or a back-to-back NDA.

A common drafting choice: the receiving party remains liable for any breach by their representatives. Push for that if you are the discloser. Resist it if you are receiving from a counterparty whose representatives you cannot control.

Compelled disclosure

NDAs cannot stop disclosures required by law. A subpoena, a court order, a regulator's notice, or a statutory reporting obligation will override the agreement, and a clause that purports to prevent compliance is unenforceable to that extent.

Include a narrow carve-out for disclosure required by law, court, or regulator. Require the receiving party to give the discloser prompt notice (where lawful), so the discloser can seek a protective order or narrow the disclosure. The clause should also preserve whistleblower protections — those sit in the Corporations Act 2001 (Cth) and other federal statutes and cannot be contracted out of.

Term and survival

Two separate questions hiding in one clause.

Term of the agreement. How long the NDA itself stays on foot — usually until the transaction completes, the discussions end, or a fixed period passes.
Survival of confidentiality obligations. How long the duty to keep the information confidential lasts after the agreement ends.

Three to five years is the default for ordinary commercial information. Trade secrets — recipes, algorithms, formulas — should be protected for as long as they remain secret, sometimes indefinitely, because their value depends on never being disclosed. A two-year survival clause on a trade secret is a self-inflicted wound.

Return or destruction

When the discussions end, the receiving party should return or destroy the confidential information on request. The clause should cover copies, including electronic copies in email, cloud storage, and backup systems.

Allow a carve-out for information the receiving party must retain for legal or regulatory reasons (audit records, litigation holds), provided the surviving copies stay subject to the confidentiality obligations.
Require written confirmation of destruction if you are the discloser. Without it, you have no way of checking.

Remedies and injunctive relief

Damages are a poor remedy for a leak. By the time you have proved loss, the information is already out, and the loss may be unquantifiable. The clause should expressly acknowledge that damages may be inadequate and that the discloser can seek injunctive relief — a court order stopping the misuse before it spreads.

This does not change the test the court applies (the discloser still has to show grounds), but it removes one argument the receiving party might otherwise run.

No licence, no deal, no IP transfer

Three statements that should be explicit, not assumed:

Sharing information does not grant any licence to use the underlying intellectual property beyond the permitted purpose.
Nothing in the NDA obliges either party to proceed with a transaction.
Feedback, suggestions, or improvements the receiving party offers do not transfer ownership of any IP back to the discloser unless separately agreed.

If you expect to create IP together during the discussions — a joint prototype, a co-developed spec — do not try to handle that inside the NDA. Use a separate IP assignment or collaboration agreement.

Governing law and jurisdiction

Pick one Australian state or territory. Courts of that jurisdiction should have exclusive jurisdiction over disputes. If the counterparty is overseas, expect a fight on this clause — they will want their own jurisdiction, or a neutral forum like Singapore. Standing firm on Australian jurisdiction matters more when you are the discloser, because injunctive relief is faster to obtain from a local court.

Execution

The mechanical clause that is easy to get wrong. Three things to settle:

Agreement or deed? A deed binds without consideration, which matters when one party is not paying anything or providing anything in return. Early investor meetings often use a deed for this reason. Deeds have different execution formalities and longer limitation periods.
Who is signing? Confirm the legal entity name (not the trading name) and the authority of the signatory. For companies, signing under s 127 of the Corporations Act 2001 (Cth) gives the counterparty the benefit of the statutory assumptions about valid execution.
Wet ink or electronic? The Electronic Transactions Act 1999 (Cth) recognises electronic signatures for most documents, and the company execution provisions in s 127 now expressly accommodate electronic signing. Keep an execution record either way.

Optional clauses worth considering

Non-solicit of personnel — if the receiving party will meet your staff during diligence, a short non-solicit prevents poaching. Has to be reasonable in scope and duration to survive a restraint of trade challenge.
No reverse engineering — if you are disclosing software, hardware, or a physical product, expressly prohibit reverse engineering. Confidentiality alone may not cover it.
Residuals carve-out — receiving parties (especially large counterparties) sometimes push for a "residuals" clause, allowing employees to use information retained in their unaided memory. Push back. It is a leak by design.
Standstill — in M&A, an NDA sometimes includes a standstill stopping the receiving party from making a hostile bid for a period. Useful when you are sharing diligence with a competitor.
Notification of unauthorised disclosure — requires the receiving party to tell you promptly if there has been a breach. Helps you act before the damage spreads.

Where Artificer Legal adds value on an NDA review

The clauses that decide whether an NDA actually protects you are rarely the ones the parties argue about. We focus on three areas when reviewing or drafting:

The definition of confidential information and the permitted purpose, read together. These two clauses set the perimeter. Most templates we see have a workable definition paired with a permitted purpose so broad it lets information walk out the other side. We tighten the purpose to the specific transaction and align the definition to the categories you will actually disclose.
Survival and trade secrets. If you are sharing anything that derives its value from secrecy, a fixed survival period is the wrong default. We will push for indefinite survival on identified trade secrets, with a shorter period for the rest.
Remedies and execution. Injunctive relief language, the choice between agreement and deed, and proper company execution under s 127 — small clauses that decide whether you can enforce quickly when something goes wrong.

We also flag clauses to remove. Residuals carve-outs, "any lawful purpose" permitted-use clauses, and exclusions that put the burden of proof on the discloser are common in counterparty drafts and rarely defensible. If you are signing someone else's NDA, the work is mostly subtractive.

The definition of confidential information and the permitted purpose

If one clause decides who wins when an NDA goes to court, it is the definition of confidential information read against the permitted purpose. Every other clause — survival, remedies, return — operates on whatever those two clauses have captured. A perfectly drafted injunctive relief clause cannot save an NDA that failed to define the information clearly or limited its use loosely enough to swallow the protection.

NDAs sit at the front of almost every commercial conversation an Australian SME has, from investor pitches and supplier negotiations to M&A diligence and contractor onboarding. The agreement does its job when the definition of confidential information is specific to what is actually being shared, the permitted purpose is tied to the transaction in front of you, the exclusions carry the standard carve-outs without flipping the burden of proof, and the survival period reflects how long the information will remain valuable. Decide between a deed and an agreement based on whether consideration is moving, execute correctly under s 127 if a company is signing, and keep injunctive relief on the table for the cases where damages will not be enough. The mechanics of putting one in place — choose one-way or mutual, tailor the key clauses, share on a need-to-know basis, and keep a record of what went out — matter less than getting the perimeter clauses right at the start.