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Adequate considerations to enforce NDAs

On Behalf of | Mar 7, 2022 | Uncategorized |

Non-disclosure agreements are a valuable legal document for businesses to protect their intellectual property. Traditionally, they are easier to enforce than non-compete agreements, but courts still consider whether the employer provided adequate considerations for their employees.

According to the Texas Workforce Commission, violating a confidentiality agreement gives the company a legal right to disciplinary action. However, the court must first decide if the NDA is legitimate.

Adequate considerations

A legal contract must include something of value for both parties. The value received from such a contract does not have to be financial. Because such considerations are not objective, enforcing a non-disclosure agreement almost always requires litigation attorneys. In the case of a company trying to implement its NDA, the litigator must prove the employee receives adequate compensation.

Examples of inadequate considerations

Texas does not consider employment to be enough compensation to enforce an NDA. If you merely promise an employee their job, the courts will most likely strike down your contract. Also, the benefits the employee already receives for their job do not count towards an enforceable NDA. Firms that wish to keep their trade secrets confidential must provide new perks, beneficial information, cash payments or other valuable services. Keep in mind that if you provide something useful to your employee besides cash or benefits, it is more difficult to prove their adequacy. Usually, courts rely on precedent when enforcing an NDA.

If you believe an NDA is beneficial to your company, consult with an experienced attorney before presenting it to your employee. Remember that you must provide them with a value that Texas courts consider adequate before they will enforce your arrangement.

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