What happens if you break an NDA?
Learn about the consequences you could face if you choose to violate a non-disclosure agreement.
Are you in a contract you’re not happy with and want to know what happens if you break an NDA? An NDA or “non-disclosure agreement” is a relatively standard legal contract. The individual who signs the NDA agrees not to publicly disclose certain information about an individual, employer, or other entity. But what happens if you break a non-disclosure agreement? There can be some severe consequences, so always think before you sign.
What is a non-disclosure agreement (NDA)?
A non-disclosure agreement, often referred to as an NDA, is a legally binding contract that serves to safeguard sensitive and confidential information. These agreements are typically established between two or more parties. One party discloses certain information while the other party commits to not sharing, disclosing, or using that information for unauthorized purposes. NDAs are used in various business and legal contexts to protect intellectual property, trade secrets, proprietary data, and any other confidential matters. It’s worth confirming you have an NDA versus non-compete agreement, as these are slightly different from one another.
Are all NDAs the same?
NDAs aren’t one-size-fits-all. Their enforceability can vary due to factors like what kind of information is covered, how long the protection lasts, how many parties are involved, and any exemptions or restrictions mentioned in the agreement. The extent to which NDAs are enforced can also depend on the legal jurisdiction, the clarity and fairness of the agreement, and the specific circumstances surrounding a breach. Generally, a well-drafted and reasonable NDA is more likely to hold up in court, but each case’s outcome is influenced by factors such as the legal system, the evidence presented, and any unique details. It’s recommended to consult with legal experts to ensure that an NDA complies with the relevant laws and offers the necessary protection for confidential information.
Let’s explore the consequences of not adhering to an NDA.
What happens if you break an NDA?
Non-disclosure agreements are designed to heavily deter people from releasing sensitive information to other parties or the public, and for this to be effective, there must be some hefty consequences attached. In many cases, the specific impact of breaking your NDA will be outlined in the contract. Some examples of penalties related to breaking an NDA include:
- A lawsuit for breach of contract
- Monetary fines
- Termination of employment (if the NDA is signed as a condition of employment)
Again, most consequences of breaking a non-disclosure are outlined in the contract itself, so always carefully review the terms of the NDA before you sign.
Can you go to jail for breaking an NDA?
Breaking an NDA usually doesn’t result in jail time — as NDAs are civil contracts, not criminal agreements. Typically, the consequence is a breach of contract lawsuit, where the harmed party may seek financial compensation if the court rules in their favor. In rare instances, disregarding a court-issued injunction could lead to contempt of court charges and possibly result in fines or imprisonment. Criminal charges related to NDA breaches are unusual and involve cases tied to criminal activities like espionage or insider trading. In daily business or employment NDAs, the common outcome is a civil lawsuit for damages or injunctive relief — not criminal charges.
Is it ever okay to break an NDA?
The basic answer to this is ... no. However, non-disclosure agreements are never designed to conceal things like criminal activity. If you signed an NDA and were later the victim of or witnessed criminal wrongdoing, it’s best to consult a lawyer to see what options are available to you.
NDAs can carry serious civil and criminal penalties if broken, so like all contracts, you must understand all the terms of the agreement before you sign. If in doubt, contact an attorney who can review the document for you and answer any questions before you sign.
Tools to make signing NDAs more secure.
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