Confidentiality agreements, also known as non-disclosure agreements, are common contract inclusions. Businesses of all varieties may include non-disclosure agreements in various contracts to protect the company’s competitive advantages.
Confidentiality agreements are common in employment contracts. After all, the workers at a company have access to trade secrets such as client lists, recipes and other non-public information. Companies may also integrate confidentiality agreements into contracts with outside businesses that provide materials, products or services.
A confidentiality agreement can protect a company from the damages that may result from the sharing of non-public information, such as reputation damage or loss of market share. Sadly, not everyone subject to a non-disclosure agreement fulfills their obligation to maintain confidentiality. How can organizations effectively respond to violations of non-disclosure or confidentiality agreements?
By reviewing the contract
Many restrictive covenants have specific limits integrated into the terms of the agreements. A party may only be bound to maintain confidentiality in certain circumstances or for a specific amount of time. Reviewing the language of the contract can help validate whether a breach of the agreement occurred.
By filing an enforcement lawsuit
Technically, a confidentiality or nondisclosure agreement has minimal impacts on its own. The party alleging that a breach of contract has occurred may need the assistance of the courts to enforce the initial agreement and any penalty clauses it may have included.
Confidentiality agreements often impose specific penalties in scenarios where one party breaches the contract. The business filing the lawsuit may also be able to request damages if the breach of the agreement causes monetary losses.
In some cases, the initiation of a lawsuit can be enough to prompt the other party to propose a settlement or agree to mediation. Other times, if the case goes to trial, a judge can award damages, enforce penalty clauses and possibly even issue an injunction helping to prevent additional infractions in the future.
Monitoring social media and the conduct of competitors can help businesses identify when a breach of a confidentiality agreement may have occurred and take legal action as appropriate. Seeking legal guidance can help companies enforce their contracts and protect against losses related to misconduct of parties who may have access to non-public information about how the organization operates.