While many business owners are aware that they need non-disclosure agreements when conducting business with anyone, they are not fully aware of what elements are necessary to render a non-disclosure agreement enforceable and non-disputable.
How to Draft an Enforceable NDA
Like all contracts, whether or not the agreement is enforceable rests on the notion of "reasonableness." The courts will examine several factors directly pertaining to the agreement as well as the circumstances leading up to the agreement. If the court finds the contract reasonable, it will be deemed enforceable. Some factors the courts will consider include:
1) The interests of the Disclosing Party in keeping the information secret;
2) The period of time in which the information must be kept secret;
3) The burden of compliance on the Receiving Party; and
4) The interests of the public.
Additionally, all of the information that the Disclosing Party wishes to be kept secret must actually be confidential, meaning it must be extraordinary in some way and not common knowledge.
When drafting your NDA, be sure to define your confidential information in language narrow enough to be defensible. It will not serve you well to have an NDA with terms that are broad enough to be interpreted in more than one way. Also, include a provision that protects all future confidential information that is introduced as new initiatives, products, or services are developed.
Most courts like to see that an NDA has a time frame. Because digital information ages quickly, it would only make sense for the NDA to be valid for a year or two, but intellectual property such as secret recipes may require long-term protection. Finally, make sure that your NDA specifically states that any party privy to confidential information is to keep that information to him or herself even beyond the term of employment.
Finally, include a provision that makes all legal costs the responsibility of the losing party. This will encourage individuals to respect the NDA, as well as encourage you to take legal action if anyone does breach the terms of the contract.
How to Enforce a Non-Disclosure Agreement
You should always consult an attorney if you believe that confidential information has been disclosed improperly. An employment attorney can help you determine whether or not you have a case, and if you do, how to proceed. They can also help you identify relevant evidence, determine how the information was leaked and to whom, and whether or not unauthorized parties have used your information.
Finally, it is important that the leak of information has damaged your business in some way; if it has not, you do not have a case (yet).
Additional resources provided by the author
If you have confidential information that you want to remain confidential, it is important that you have a clear and enforceable non-disclosure agreement in place. The Pleasanton business lawyers at Garcia & Gurney, ALC will assist you in the creation of your NDA, as well as provide legal guidance should that NDA be breached. To speak with an attorney today, call our employment law firm at 925-468-0400 or contact us online.
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