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Understanding Non-Disclosure Agreements
Non-disclosure agreements have been in the news recently with the ongoing stories about Harvey Weinstein and allegations of harassment and sexual assault. Some accusers have come forward, breaking non-disclosure agreements (NDA) that they had with him or his company. Syracuse University College of Law Professor Greg Germain, who teaches about non-disclosure agreements, explains what non-disclosures are.
“Non-disclosure agreements are designed to be difficult and expensive to get out of. Courts may not enforce the liquidated damages clauses if they constitute a penalty rather than reasonable attempt at compensation for breach. Maybe in certain circumstances, a court would determine that the agreement was unconscionable and refuse to enforce it. At a minimum the court would, I think, require the breaching party to pay restitution for the payment that was received in return for the promise. So there is a heavy cost in cases of breach of contract,” says Germain.
“One way around them is for the party to be compelled to testify under oath in a criminal or civil case. A private confidentiality agreement does not prevent being compelled by law to give testimony as part of a legal proceeding. In a criminal case or before a grand jury, the government can compel the testimony through the use of a subpoena. In a civil case, a person with relevant knowledge can be forced to testify by subpoena. A private NDA is not a defense to giving testimony compelled by law. I suspect most NDAs say that the party will not disclose absent legal compulsion. But without a legal obligation to disclose, the party would be violating the agreement by talking,” says Germain.
“The other thing that people do is breach their promise in ways that are not likely to be discovered. Leaks or agreements with the press with a promise of confidentiality are common and may be difficult for the beneficiary of the NDA to track down and prove, but the party who agreed to the NDA is at risk of being held in breach,” says Germain.
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