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Non Disclosure Agreements

Salinas, CA |

Can a non disclosure be applied as term and agreements on a promissory notes to ensure confidential information being revealed?

If so, what happens if this NDA is broken?

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Attorney answers 3

Best Answer

Often a promissory note is signed only by the debtor and not the creditor. If so it may not be treated as a contractual agreement. Typically a promissory note merely states terms that are contained in a binding loan agreement.

You could include a proper NDA in the note. If so, make sure that you use traditional NDA contractual language and that you both sign the agreement. Title it Promissory Note and NDA.

As to breach, you need to write in the effect of a breach of the NDA. You could make that an item of default so that an NDA breach is a default on the Note. You might also provide for other remedies. I like to provide clearly for injunctive relief in NDA's and require the person breaching to pay the innocent parties attorneys' fees.

Molly Cristin Hansen

Molly Cristin Hansen


I would simply add that another common tactic is to add a liquidated damages provision to the NDA that provides for a set amount -- i.e., $25,000 -- to be paid if the party subject to the NDA breaches the confidentiality provisions.


Including a non-disclosure agreement on a promissory note would convert the promissory note into a contract and destroy its nature as a negotiable instrument.
One would have to review the documents in detail to reply further, which is not the function of Avvo.

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.


I can’t visualize what the documents would look like. I can guess that the disclosee is to sign a promissory note that becomes due only if confidential info is released improperly, or is forgiven over time if it is not. If that’s it, it sounds like a penalty, and hence unenforceable. Or else the note is unenforceable because of failure of consideration: the disclosee received nothing of value for signing the note–the information is of no value to him since he can’t exploit it under the terms of the NDA. It may be that these legal hurdles can be swept aside but I think it will not be easy.
Negotiability is the least of your worries. 99.999% of promissory notes are never negotiated in the strict sense of a sale to a bona fide purchaser, and there would be no need to negotiate this one.

DISCLAIMER—This answer is for informational purposes only under the AVVO system, its terms and conditions. It is not intended as specific legal advice regarding your question. The answer could be different if all the facts were known. This answer does not establish an attorney client relationship. I am admitted only in California. (Bryant) Keith Martin

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