As a starting point, you should understand what the words “non-disclosure agreement” mean. A non-disclosure agreement is a legally binding contract in which the signing parties agree to a confidential relationship to protect confidential information, such as trade secrets or other sensitive information.
Why Someone Might Want a Non-Disclosure Agreement
Typically, when a company needs to communicate confidential information to accomplish a goal, they ask the other party to sign a non-disclosure agreement. For example, if a company is seeking investors, or planning to hire a contractor to do some work, they may need to disclose confidential information to accomplish their goals. By asking the other party to sign a non-disclosure agreement, they protect their confidential information from being discussed outside the bounds of the anticipated interaction.
Types of Information Which Might be Covered in a Non-Disclosure Agreement
Any non-public information which contributes to the company’s success might be covered by a non-disclosure agreement. This could include a manufacturing process, a proprietary formula, a secret method or recipe, a detailed client list, non-public accounting figures, or profit formulas. In essence, a non-disclosure agreement protects against “idea theft.”
Ways to Challenge a Non-Disclosure Agreement
Both parties to a non-disclosure agreement should be aware a poorly drafted non-disclosure agreement could result in the agreement being declared invalid or void. Some problems to avoid:
- The agreement is too broad. Not every piece of information a company has is “confidential.” A properly written non-disclosure agreement defines what information is confidential and what information is considered a trade secret.
- The scope of the limitation is overbroad. While trade secrets may be protected forever, most confidential information may not be subjected to a lifetime bar on disclosure. Additionally, a non-disclosure agreement that covers information not traditionally considered “confidential” may be unenforceable as overbroad.
- The agreement covers information provided by other sources. If the receiving party obtains information through a source other than the company, the company may not include that information as part of the non-disclosure agreement.
- The agreement covers information in the public domain or already known by the individual. Non-disclosure agreements may not cover information known to the general public. It also may not cover information already known to the party.
- The agreement is retroactive. Non-disclosure agreements are signed prior to the disclosure by the company to the other signing party. It may not be used to retroactively protect information disclosed.
- The agreement protects illegal acts. One basic tenant of contract law is one may not enter into a contract for illegal activity. If the non-disclosure agreement protects illegal acts, or information obtained from illegal acts, this agreement is not enforceable.
If You Have a Question about a Non-Disclosure Agreement
Whether you are a company seeking to hold a contractor or employee to the terms of their previously signed non-disclosure agreement or an individual seeking to dispute a signed non-disclosure agreement, our business litigation attorneys can help. We have years of experience handling business litigation for businesses, employees, and contractors. Please call us today at (903) 870-9050. We offer a free legal consultation to discuss the facts and circumstances of your case. Our business litigation attorneys look forward to meeting with you.