How to review a confidentiality clause

Most commercial contracts contain a confidentiality clause, even when there is no separate NDA. It controls what each party can do with the other's information during and after the deal. This guide covers how to read one, the US rules that affect it, and how to review it in Word with LexDraft.

Last checked: 18 October 2026. The law changes; check the current position before relying on this page.

Clause checklist

• Definition. All information disclosed, or only information marked confidential? Marking requirements are easy to forget in practice, so a catch-all for information that a reasonable person would understand to be confidential is common.
• Exclusions. The usual four: information already public, already known to the recipient, independently developed, or received from a third party without restriction. Check who bears the burden of proving an exclusion.
• Use restriction. Information should only be used for the purpose of the agreement. A missing use restriction is a bigger gap than a weak disclosure restriction.
• Permitted disclosure. Employees, contractors, advisers, affiliates and financing sources with a need to know, bound by similar duties. Check whether the recipient is liable for their breaches.
• Compelled disclosure. Disclosure required by law, regulation or court order, usually with prompt notice (where lawful) and cooperation in seeking a protective order.
• Duration. A fixed term after termination for ordinary confidential information, and protection for as long as information remains a trade secret. A short fixed term can undermine trade secret status.
• Residuals. A residuals clause lets the recipient use information retained in unaided memory. It is common in technology deals and often heavily negotiated.
• Return and destruction. Allow retention of backup copies and copies kept to comply with law, subject to continuing confidentiality.
• Remedies. An acknowledgment that breach may cause irreparable harm supports an injunction but does not guarantee one.

US law points

• DTSA whistleblower notice. Under 18 U.S.C. section 1833(b), an employer that does not give notice of the whistleblower immunity in a contract with an employee, contractor or consultant governing trade secrets or confidential information cannot recover exemplary damages or attorney fees under the Defend Trade Secrets Act against that individual. A cross-reference to a policy that sets out the immunity also works.
• Speak Out Act. Since December 2022, pre-dispute nondisclosure and nondisparagement clauses are not judicially enforceable with respect to a later sexual assault or sexual harassment dispute.
• Reporting to regulators. Confidentiality terms should not stop people from reporting possible violations of law to a government agency. The SEC has brought enforcement actions over agreements that impeded whistleblowing.

A confidentiality clause review workflow in Word

LexDraft is a Word add-in from Microsoft AppSource. It opens as a side panel in Word 365 (Windows and Mac), Word 2021 and Word on the web, so the agreement never leaves the tool you already draft in.

1. Open the agreement in Word and open LexDraft in the side panel.
2. Pick the governing law. Select the state named in the governing law clause so LexDraft looks for state-specific red flags.
3. Run the review. If the document is a standalone NDA, run the NDA playbook. If the confidentiality clause sits inside a SaaS MSA, DPA or services agreement, run that playbook on the whole agreement; for other contracts LexDraft runs a general review against the governing law you chose. LexDraft has no separate clause-only playbook.
4. Triage by severity. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
5. Run the quick checks. The defined-term and cross-reference checks are rule-based and run without AI.
6. Accept or reject each redline. Accepted changes land as native Word tracked changes.
7. Verify and sign off. You check every output before it goes to the client or the other side.

What LexDraft does not do

LexDraft does not give legal advice or decide whether information is a trade secret. Nothing changes in your document until you accept a redline.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. Spotted something out of date? Email support@lexdraft.ai and we will fix it.