What You Should Know about Non Disclosure Agreements
Written on October 8, 2018
Nondisclosure agreements are increasing in popularity as more Florida businesses seek to protect confidential information. Intellectual property, trade secrets, customer lists, and other items are assets that have value, so it is understandable that you want to keep them from falling into the wrong hands. A Florida contract law attorney can tell you more about the pros and cons, but there are five things you should know about nondisclosure agreements.
1. There are requirements for a nondisclosure agreement to be enforceable. A nondisclosure agreement shares many of the same characteristics of any contract, but there are additional requirements. The agreement must be limited in scope and duration, so that it is reasonable and fair to both parties. Plus, it must protect a legitimate business interest of the company or individuals.
2. A nondisclosure agreement should be in writing. Though it is not required to be a written document, any nondisclosure agreement should be in writing and signed by both parties. It is more likely to be enforceable if it clearly states the terms and conditions, the scope and duration, and other rights and obligations.
3. It is important to define the information to be kept confidential. The primary purpose of a nondisclosure agreement is to protect confidential information, but it is not wise to use a blanket statement. As mentioned, this type of contract must be limited in scope. A court may not view the scope as being reasonable if the details to be considered confidential are not specifically defined. As such, this is another reason that a nondisclosure agreement should be in writing.
4. A nondisclosure agreement must be supported by consideration. All contracts must include some sort of consideration, which means the exchanging something of value. In the employment context, consideration can be a tricky issue. If you are asked to sign one before beginning work, the fact of your employment is sufficient consideration. However, if your employer presents one some time thereafter, there must be some additional consideration to support your additional obligation. When you a nondisclosure agreement is part of an exit strategy, there must be also be added consideration. Usually, this is in the form of a severance package that includes a bonus.
5. The consequences for breach can be considerable. It is difficult to put a dollar value on how a company is harmed when confidential information gets out. However, if you are the party in breach, you can expect to pay damages coinciding with any profit you make from the confidential information. Some nondisclosure agreements include a liquidated damages clause as a way of providing certainty in the event of a breach. You should discuss whether to include this term – or whether to reject it – with a business contracts lawyer.
Talk to a Florida Contract Law Attorney About Non Disclosure Agreements
If you were presented with a nondisclosure agreement or are considering creating one, it is important to get guidance from an experienced business lawyer. These contracts are more complex than a typical agreement, and you want to ensure the protection of your interests. Please contact Clearwater Business Law at (727) 785-5100 for more information or to schedule a consultation regarding your circumstances.