Do you know whether your confidentiality agreement is legal? A number of issues can render confidentiality agreements invalid.
Common pitfalls in such contractual agreements include overbroad, unreasonable, or unduly burdensome terms. When these terms are not legally sound, they risk making the agreement unenforceable.
Here are three questions to ask yourself to figure out if your confidentiality agreement is valid:
1. Is It Supported by Consideration?
A binding contract must be supported by consideration. That means the person signing the confidentiality agreement needs to get something in return for his or her promise. Accordingly, confidentiality agreements require consideration to be valid.
The requirements for consideration will often depend on timing: whether the contract was signed at the time of hire or during employment. If the contract was executed at the time of hire, the job offer itself can suffice as consideration. But if the contract was executed during employment, your employer needs to offer you something to serve as consideration.
2. Is It Realistic and Reasonable?
Just like non-compete clauses and other contractual restrictions, most courts require any confidentiality agreement to be "reasonable."
To determine the reasonableness of a confidentiality agreement, courts will balance several factors, including:
- The employer's legitimate business interests in keeping the information secret,
- The duration of the obligation,
- The burden on the employee, and
- The interests of the public.
A legal confidentiality agreement is not unduly burdensome and serves a legitimate purpose.
3. Is Its Scope Reasonable?
Confidentiality agreements can be deemed unenforceable when they are overly broad. To prevent this issue, most confidentiality agreements include exceptions to confidentiality agreement, including:
- Information the employee already knew,
- Information already generally available to the public, and
- Information obtained illegally.
If you're not sure whether your confidentiality agreement is legal -- or if you want to learn about confidentiality agreements in other legal contexts such as family law or medical malpractice -- you may want to consult an experienced contracts attorney for additional assistance.
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