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People use legal contracts to make a matter or transaction legally enforceable. Legally enforceable contracts can be upheld in court by a judge. Judges can also order damages if either party to the contract does not uphold their obligations under it. A standard contract used by both businesses and individuals is a confidentiality agreement. This is a contract that protects sensitive information. However, a contract is only useful to you if you can enforce it. This article will explain what a confidentiality agreement is and how you can enforce it. 

What is a Confidentiality Agreement?

A confidentiality agreement is a legally binding contract used to protect sensitive information. During negotiations, people will often have to disclose specific information which cannot be shared to the public. A confidentiality agreement requires a person to keep any confidential information specified private.

For example, confidential information such as trade secrets or business practices is often protected using a confidentiality agreement. 

Enforcing a Confidentiality Agreement

If something goes wrong and you must enforce the terms of your confidentiality agreement, then you can do this in several ways.

Settlement out of Court

The best way to enforce a legal agreement is to try and resolve the matter outside of court. If your contracting party has breached the agreement and revealed sensitive information, you should try to find a reasonable solution that benefits both parties. It is best to inform your contracting party how they have breached the contract. Your contract can then guide you with a damages clause.

Damages Clause

A damages clause within a confidentiality agreement states what either party must pay the other if they breach the contract. They are useful as they illustrate the penalty for breaching the confidentiality agreement, which might deter either party from doing this. Your damages clause must be detailed enough to cover all situations where a breach could occur. For example, the damages ordered for a minor breach will be much lower than damages for a more significant breach of confidential information.

Court Proceedings

Another way that you can enforce a contract is through court proceedings. If you suspect that your contracting party has breached the contract, you can ask the court to enforce the contract. There are three main remedies that a court can give in this situation. These are:

  • specific performance;
  • damages; or
  • an injunction.

Specific Performance

Specific performance is where the courts enforce the terms of the contract by requiring the contracting party to follow them. This may not be the best option in the case of a confidentiality agreement, as the other party might have already released information into the public domain.

Damages

The most common remedy that the courts will give for a breach of confidentiality is damages. This is where the court orders the person who breached the contract to pay a monetary figure to the other contracting party. This amount is usually in line with whatever loss the initial party incurred because of the breach. If there is a damages clause, then the courts are likely to enforce it. 

Injunction

Another remedy that the courts might be able to give is an injunction. An injunction is a remedy that stops something from happening. So, for example, if someone has leaked information to the press, but the story has not been published yet, you can ask the courts to issue an emergency injunction to stop the story from being run. 

Key Takeaways

A contract is a legally binding document dedicated to upholding transactions and agreements between different parties. For example, a confidentiality agreement is a type of contract that stops someone from spreading certain information to the public. Businesses often require their employees to sign confidentiality agreements. Investors might also have to sign confidentiality agreements to protect a company’s intellectual property. You can enforce confidentiality agreements as they are legally binding. This means the courts can enforce the agreement or require the party who breached the agreement to pay damages for any loss incurred. However, it is always best to resolve these matters outside of court to save money and time.

For legal assistance with managing your contracts, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Can I require my employees to sign confidentiality agreements?

Yes, as long as this is a term of the employment contract you and your employee have signed. You can do this to protect your trade secrets and other confidential information.

Does a court have to enforce a confidentiality agreement?

As long as the confidentiality agreement meets all the requirements of a binding contract, the courts must enforce it. 

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