How binding is a non-disclosure agreement?
A great way to safeguard private information is by drafting a non-disclosure agreement or NDA. However, is a non-disclosure agreement always enforceable in court?
For the most part, NDAs are enforceable. However, before creating an NDA, one should be aware of a few areas that are most commonly missed.
The NDA should be enforceable in court as long as it is properly written and the information it is intended to protect is adequately protected.
The NDA must expressly define items including:
- The names of the recipient party or parties
- The information being shared
- Correct and incorrect uses of the information
- How and why the information is disseminated
The following may be grounds to void an NDA:
- The document’s phrasing is too broad. Clarifying what is covered and who is subject to the terms of the agreement is one of the most crucial things an NDA must do.
- The confidential information is related to illegal activity. The document names the incorrect party. It’s crucial to keep in mind that only the party who is expressly identified in the document can be held accountable for violating a non-disclosure or confidentiality agreement.
- A third party independently acquires or creates the confidential information. A non-disclosure agreement won’t apply if you are working with a person or organization that is in your industry and has independently developed sensitive material that is identical to or similar to yours.
- The confidential information is in the public domain. You cannot use an NDA to prevent the disclosure of publicly available information. An NDA designed to shield your private information will be invalid if it has already become public knowledge.
- Disclosures are made before the NDA is signed. If the information has already been communicated, the recipient listed in the non-disclosure agreement may contest the NDA’s legality.
- The document applies to the wrong jurisdiction. An NDA typically only applies to the nation (and sometimes the state) in which it was signed.
- The signee has no authority to bind the party to the NDA. The NDA will be void if it is signed by someone with insufficient power or who is not allowed to create such an agreement on behalf of the organization. The signee does not have the ability to bind the party to the NDA.
- The confidential information isn’t properly protected by its owner. It can be claimed that confidential information is no longer confidential if the owner fails to adequately protect it by making sure that access to it is restricted.
