-A non-disclosure agreement (NDA) is a legally enforceable contract that establishes a confidential relationship between two parties. The person or parties signing the agreement agree that any sensitive information obtained will not be shared with anyone else.
An NDA is also known as a secrecy agreement and is commonly used when firms negotiate with other businesses.
They allow the parties to exchange critical information without worrying about it falling into third parties’ hands. In this scenario, it is referred to as a mutual non-disclosure agreement.
What is Involved in Breaking an NDA?
An individual violates an NDA if they act in a way that contradicts the commitments and terms they agreed to and were legally bound by when they signed the non-disclosure agreement. Because non-disclosure agreements often prevent the sharing of sensitive and private information, releasing that information to a third party violates the terms of the agreement. In other words, you will have broken the terms of your NDA.
What Happens if You Break an NDA?
Breaching an NDA is a serious issue and can have severe consequences. Here is what happens when you break an NDA.
Investigation
Most companies begin a formal investigation upon finding out about the breach of an NDA. During the research, they will find out which information was leaked, who leaked it, and who it was leaked to. They must also review the NDA to determine if any breach occurred.
Assess Legal Action
The company can make a legal claim if enough evidence during the investigation suggests that a breach occurred. When making a legal claim, the company must consider the breach’s seriousness and the financial implications of the violation. The company must also consider whether the breach was intentional or accidental and whether it is in its interest to sue.
Check for Exceptions
Even though the terms within an NDA are strict, there are some exceptions to the NDA requirements. For instance, the NDA may have expired, or there might have been criminal wrongdoing. While these situations can support your case if you’ve been found to have breached confidentiality, you should always speak to a lawyer before deciding to break an NDA.
Sue for Breach of Contract
If the affected party sues for an NDA, both parties must seek legal advice and start court proceedings. From there, the courts will determine if an NDA has been broken and decide on the appropriate remedy.
What Are the Remedies for Breach of an NDA?
The main remedies for a breach of an NDA include:
Damages
Damages are awarded if the affected party suffers financial loss due to the information being disclosed. If the breaching party intended to sell the information, the court can award damages for breach of an NDA to match the sum they would have received.
Injunctions
If the breaching party doesn’t have the financial means to afford damages, an injunction will be imposed to prevent the employee from ever sharing confidential information.
NDAs usually prevent the sharing of classified information with an external party. Breaching an NDA has serious consequences such as the ones discussed above.If you want to learn more about managing NDAs more effectively or to fill an NDA form, Forms.legal has custom templates for creating non disclosure agreement that will come in handy.