When a person has access to confidential information that is disclosed to him or her during the course of their employment, the employer may ask him or her to sign a nondisclosure agreement to protect this information.
If the employee then later uses the confidential information without the employer’s permission, the employer can file an injunction to prevent that use and may be able to sue the employee for damages for breaching the agreement.
Nondisclosure agreements must include several elements to be effective. They must list the parties to the agreement and what information is considered confidential. The parties are not required to disclose the confidential information, but instead can define the subject matter that is confidential.
It must also define and include exclusions to confidential information. It should also note the obligations and duties of the parties who receive the information. Finally, the agreement should set a time period for the employee to maintain the confidentiality.
Nondisclosure agreements can be challenged for several reasons. If the terms of the agreement are too broad, burdensome, vague or unreasonable the agreement may not be enforceable.
Also, if the party who wants to keep the information confidential fails to keep it safe and a breach occurs, the agreement may not be enforceable.
General contract law also applies to nondisclosure agreements, meaning the parties must have the capacity to enter into the contract, it cannot be executed under coercion or duress and the parties cannot attempt to protect information about illegal activities.
If parties have questions about nondisclosure agreements or a dispute arises, an experienced attorney can help.