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Employment law

NDAs (nondisclosure agreements)

Nondisclosure agreements—also known as NDAs or confidentiality agreements—are legally enforceable contracts that obligate the parties to the agreement to keep information shared in the course of the parties’ relationship confidential—and not to use it for any other purpose or disclose it to any other person or entity not authorized to receive the information. Nondisclosure agreements are used in a variety of business, employment, and work relationships, including between employers and employees and companies and independent contractors.

Nondisclosure agreements typically include a definition of what constitutes confidential information under the agreement and may be limited to a period of time—usually a number of years—in which confidential information shared between the parties cannot be used or disclosed. Nondisclosure agreements also usually include a provision stating that one or both parties agree that if one party violates the agreement the other party would not have an adequate remedy at law—meaning money damages awarded by a judge or jury would not adequately compensate the party whose confidential information was disclosed—and a court may enter an injunction ordering the party who improperly disclosed the confidential information not to do so again, or face additional penalties (civil and criminal contempt of court) for violating the court’s order.

Because nondisclosure agreements are contracts they are generally governed by state contract law, and which state’s law applies is determined by whether the parties agreed to the applicable law in the NDA (a choice-of-law provision), where the parties are located, or where property or places important to the relationship are located—such as real estate, personal property, intellectual property, corporate headquarters, or place of work—or other relevant facts and circumstances.

In Texas, nondisclosure agreements (NDAs), also known as confidentiality agreements, are recognized as legally binding contracts that require parties to maintain the confidentiality of shared information and restrict its use to the agreed purposes. These agreements are commonly used in business and employment contexts, including relationships between employers and employees, as well as between companies and independent contractors. Texas NDAs typically define what is considered confidential information and often include a duration for the confidentiality obligation. They may also contain provisions for injunctive relief, acknowledging that monetary damages may not be sufficient if the agreement is breached, and allowing courts to issue orders to prevent further unauthorized disclosure, with potential civil or criminal penalties for non-compliance. The enforceability of NDAs in Texas is governed by state contract law, and the applicable law can be determined by a choice-of-law provision within the agreement, the location of the parties, or the location of relevant property or business activities. It is important for parties entering into an NDA in Texas to ensure that the terms are clear, reasonable, and comply with applicable state laws to ensure enforceability.

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