Companies implement measures to protect their businesses from harmful and malicious acts by employees or partners. A common protective measure is nondisclosure agreements (NDA), which aim to prevent unauthorized disclosure of confidential company information. If a person who has a contractual relationship with a company breaches the NDA, the latter can take legal action against them. However, note that NDAs have limits.
Requirements for enforceability
While Pennsylvania acknowledges NDAs, the agreement is only enforceable if it adheres to certain elements, which include the following:
- There is a contractual relationship between the company and the other party
- The agreement protects legitimate business interests, such as trade secrets, proprietary information and other company knowledge not generally known to the public
- The other party must have access to the protected information
- The duration and geographic scope of the NDA must be reasonable and not overstretching
The reasonableness of the duration and area scope will depend on the circumstances of each case. But generally, the NDA terms must not be too broad or restrictive that it affects the other party’s employment or business opportunities.
Moreover, NDAs must not include terms that are illegal and violate employment laws.
The importance of drafting NDAs within the limits
While NDAs aim to protect a company’s business interests, the contract should not limit opportunities and violate individual rights. A reasonable NDA will help your company uphold its terms in court if the other party breaches the same. If you want to solidify your contract, consulting with a legal expert can guide you to your goal.
