NDAs, Confidentiality, Non-Solicitation, and Non-Competition Agreements – PART 1
Welcome to PART ONE of our new series here on “Words of the Law,” the Online Legal Translations blog.
“NDAs, Confidentiality, Non-Solicitation, and Non-Competition Agreements”
PART ONE – The Terms
Here we will discuss the often-mentioned, but seldom fully-understood terms “NDA,” “Confidentiality,” “Non-Solicitation/Non-Solicit,” and “Non-Competition/Non-Compete” agreements.
We will be talking about these terms as they exist under laws and rules of the United States only, but the general concepts discussed about in this article are very similar in many other jurisdictions.
This may come as a surprise, but these words—”NDA,” “Confidentiality,” etc. have no fixed legal meanings, as do words such as “burglary” or “fraud” which are defined in statues and further clarified by common law—published legal opinions of cases that have been before a court.
These words are terms used by people to describe agreements or parts of agreements. Unless these terms are specifically defined within an agreement to which both parties agree, these words can mean just about anything. The written obligations to which the parties agree are all that that really matter. Don’t be misled by titles of agreements or titles of paragraphs, or what people are calling agreements they are handing you to sign, all that matters is what is actually written therein. Many agreements even have sections within them stating that the titles of its paragraphs are not legally binding, and that you should pay attention instead to what is written therein, because that is all that will be enforced.
These terms, “NDA,” “Non-Compete,” “Non-Solicit,” and “Confidentiality,” are legal concepts and we will discuss how they are generally understood and used under the law, but again ,we strongly stress that the actual text of the agreement you execute is what is important because that is the text that is enforceable. By “enforceable” we mean, if one side does not hold up their end of the deal, the other will have a remedy provided by the law. Some remedies include:
- The right to sue the other party in court with a breach of contract claim
- An automatic remedy under the law (this is more common concerning business-to-consumer agreements than in business-to-business or “B2B” agreements)
- Other remedies to which you agree to within the agreement such as liquidated damages–a specified amount the parties agree the breaching party will pay in the event of a breach of the agreement.
Let’s start with some broad legal understandings of these words:
Confidentiality– a general concept which can describe “sensitive, secret and/or proprietary information.”
Non-Disclosure– “Don’t share information we give you.”
Non-solicitation– “Don’t steal our workers, don’t steal our clients.”
Non-Compete – “Don’t learn things from us and then go to work for our competitors.”
Again, these are not legal definitions, they are examples of how these words are sometimes used. The obligations under these concepts may be stated in a stand-alone agreement, such as a Non-Disclosure Agreement (NDA), or as a section of a broader agreement that covers an entire business deal or business relationship, such as a Service Agreement or a Purchase and Sale Agreement.
A party may be asked to sign an NDA preliminarily, as part of the negotiation process in a business deal and then later, to sign a Service Agreement which discusses the same terms as the NDA, and in this series, we will explain why.
For now, we can think broadly of these words as fluid terms that change meaning according to the agreement in which they appear. Come back soon for our next segment in this series: “Non-Compete and Non-Solicit Agreements—What’s the Difference?”
Notice and Disclaimer – This blog article is not a substitute for an attorney, a law firm or any other advice, opinions or representation. Online Legal Translations is not providing legal advice, opinions, or representation. All examples are for illustration purposes, are provided out of context, and may not be appropriate for any particular situation.