In today’s landscape, confidentiality is often key to maintaining trust in professional relationships and protecting valuable or sensitive information. One common tool used to safeguard this trust is a Non-Disclosure Agreement (NDA). But what exactly is an NDA, and what happens if you breach one?
What is an NDA?
A Non-Disclosure Agreement, or NDA, is a legal contract between two or more parties that establishes a confidentiality obligation. The purpose of an NDA is to ensure that private or sensitive information shared between the parties is not disclosed to unauthorized individuals or entities. NDAs are often used in business deals, employment agreements, and among individuals to protect trade secrets, proprietary information, or other confidential data. By signing an NDA, you agree to specific terms regarding what information must remain private and the consequences of violating the agreement.
What Happens If I Breach an NDA?
Breaching an NDA is a breach of contract, and can lead to serious legal and financial consequences. Depending on the terms of the agreement, a breach may result in lawsuits, monetary damages, and injunctions to prevent further disclosure. In some cases, the injured party may seek compensation for losses caused by the breach, including lost revenue or harm to their reputation. Additionally, breaching an NDA can damage professional relationships and tarnish your credibility, making it more difficult to build trust in future endeavors.
I Signed an NDA, But Now I Need to Disclose Some Information. What Should I Do?
If you find yourself needing to disclose information protected under an NDA, the first step is to review the terms of the agreement. As an initial step, you should determine if the information you want to disclose is covered under the scope of the NDA. Even previously confidential information may fall outside the scope under certain circumstances (e.g. if it becomes publicly available). Look for any clauses that outline exceptions, as your need for disclosure may be permitted. Common exceptions include disclosure for enforcement purposes, in order to comply with legal obligations like a court order, or to your business representatives. Also, be on the lookout for liquidated damages provisions and injunctive relief clauses, as these drastic remedies can create significant issues for the person disclosing information.
Next, if possible, consult with the other party involved to request permission for the disclosure. Transparency and proactive communication can often – but not always – help resolve such situations amicably. However, if you do not want to contact the other party, you may consider hiring an attorney to explain the risks of disclosure and offer guidance as to how likely it is that the other side will sue you for breach of contract if you breach your NDA.
Here’s an example: let’s say you signed an NDA with your former employer when you stopped working for that company and both sides promised to keep the terms of your separation confidential. Now, let’s say you are interviewing for a new job, and the new company asked you why you left your old job. You cannot share any of the information protected by the NDA or you will be in breach. However, you need to answer the question to move forward with the new company. This is where an attorney’s guidance can help you navigate what you may – and may not – share (and the risks of violating your NDA). Depending on the specific language of your NDA, you may be able to give a general reason, like “I wanted to make a change.” If the new company presses you, you may need to tell them that you can’t disclose any details due to an NDA – but in some cases, even mentioning that you signed an NDA is a breach, so it’s important to carefully review your specific NDA and understand its terms.
Here’s a different example: let’s add to the above that the NDA required you to keep confidential that you were subjected to sexual harassment at your old job. In New York, those confidentiality provisions are void by law, meaning that even if you signed an NDA, you are allowed to disclose this information. This illustrates another reason why an attorney can make a big difference – in this example, by explaining changes in the law that would render your NDA invalid.
Conclusion
NDAs are vital tools for protecting sensitive information, but they come with stringent responsibilities. Understanding the implications of breaching an NDA and knowing how to handle disclosure needs can help you navigate these agreements effectively and maintain trust in your professional relationships. If you need further guidance about NDAs, reach out to a member of our team for next steps.
