Non Disclosure Agreement Penalty Clause
The argument is that such a clause makes such a partial legal agreement for the public party and induces it too much to take legal action, even for the most trivial cases. On the surface, liquidated damage appears to be a powerful tool to prevent the receiving party from sharing information protected by the NDA. Suppose a particular NOA has a liquidated compensation clause that provides that $50,000 will be paid by the beneficiary in the event of an unlawful breach of contract. The benefits of such a clause are obvious: quick fix, no need to prove the infringement, no need to take legal action, and increased security as the recipient processes confidential information. Keep in mind that this clause should be an acceptable clause for both parties, so be careful not to be too specific, excessive in your remedial or unilateral requirements when it comes to possible solutions. If it is too biased, the recipient may also be reluctant to sign the agreement. However, for this type of legal agreement to be effective in protecting your confidential information, it must be a well-written, legitimate and imperative agreement. In other words, if it is not judged, what is the purpose? There is nothing wrong with using a liquidated compensation clause to motivate the other party to provide benefits, but this clause cannot be punishable and does not necessarily guarantee that sensitive information remains private. At the end of the day, a signed NOA is only as strong as the signatory`s propensity to meet its commercial terms.