As business litigators in Los Angeles, we get asked many legal questions each day by our clients and potential clients. However, we’ve noticed that a few seem to be more common than others. One of those relates to the every mysterious (at least in California) non-disclosure agreement, or NDA. An NDA is contract by which the parties (often an employer and employee) agree not to disclose information covered by the agreement, such as trade secrets. In other words, an NDA protects nonpublic business information.
So the popular question is: Is a non-disclosure agreement binding if only one side has signed the agreement and the business relationship is never entered into? For example, if a potential employee signs a non-disclosure agreement but before the employer also signs and before the employment contract is made official (i.e. before the actual employment starts), the company has second thoughts and does not hire the person — is the person still held to the terms of the NDA?
Read on for the answer…
While the answer varies depending on the facts and circumstances of your potential case, in some instances a contract that you signed can be enforced against you, even if you don’t have a signature from the other side. Many people assume that a contract is not valid if the other party has not signed it, which is sometimes not the case. However, in terms of an NDA, as long as you don’t use or disclose the information, the NDA should not be a burden to you. However, if you plan on going to work for a similar or competing company, it would be wise to go speak with a skilled business litigation lawyer to discuss potential conflicts that may arise out of the NDA. You do not want a former almost-employer to bring a breach of contract lawsuit against you, where the employer can seek monetary compensation for losses suffered.