Businesses often require employees and others who work for them, such as independent contractors, to sign non-disclosure agreements (NDAs). They can protect information about the company, including trade secrets and other intellectual property, from getting into the hands of those who could profit from it or use it to hurt the business and its owners.
The power of an NDA, when properly drafted by the disclosing party, is that if a person who signed it (the receiving party) violates it, they can be held liable and potentially have to pay a significant amount of money in damages.
Non-disclosure agreements are required to contain specific elements. If they don't, all or part of an NDA may be ruled unenforceable if the receiving party challenges it in court.
Following are some of the most common reasons that people challenge the enforceability of an NDA:
- The terms are too broad, vague, unreasonable and/or burdensome.
- The specific damages of the NDA breach are too difficult to quantify.
- The information disclosed by the receiving party would have eventually gotten out anyway. This is called the "inevitable disclosure" doctrine.
- The disclosing party didn't safeguard or maintain the confidentiality of the information in question.
- The receiving party signed the NDA under duress, or undue influence was placed on them.
- The receiving party lacked the capacity to understand what they were signing.
- The NDA was "unconscionable." An NDA could be ruled unconscionable, for example, because of the disparity in bargaining power between the disclosing and receiving parties or because the NDA unreasonably favors the disclosing party.
The best way to assure that your NDAs are enforceable and will protect your business interests is to have an experienced North Carolina attorney draw them up or at least review them. This can help you ensure that they don't contain any provisions that would invalidate them under federal or state laws.