If you’re considering signing an NDA or are already bound by one, it’s essential to understand your rights, obligations, and potential consequences of breaking the agreement. In this guide, we’ll cover what NDAs are, how they work, their enforceability in the UK, and what happens if you breach one.
What is a non-disclosure agreement (NDA)?
A non-disclosure agreement (NDA) is a legally binding contract that protects confidential information from being shared with third parties. NDAs are commonly used in business transactions, employment agreements, and partnerships to safeguard sensitive data, trade secrets, and intellectual property.
There are two main types of NDAs:
Unilateral NDA: One party shares confidential information, and the other party agrees not to disclose it. This is common in employer-employee relationships or when a company shares trade secrets with a contractor.
Mutual NDA: Used when both parties exchange sensitive information and agree not to share it with anyone else. This is often seen in business negotiations, joint ventures, or partnerships.
Are they legally enforceable in the UK?
Yes, non-disclosure agreements (NDAs) are legally enforceable in the UK, as long as they meet contract law requirements. To be valid, an NDA must:
Clearly define what information is confidential – It should specify what is protected and what is not.
Be signed and agreed upon by both parties – Both sides must willingly accept the terms.
Be fair in scope, location, and duration – It cannot be overly restrictive or last indefinitely.
Not conflict with public interest or employment rights – It must comply with UK laws and ethical standards.
However, NDAs cannot be used to silence whistleblowers or prevent someone from reporting illegal activities such as discrimination, harassment, or financial misconduct. If an NDA is unfair or too restrictive, it may not hold up in court.
💡 Key takeaway: NDAs can protect confidential information, but they must be reasonable and lawful to be enforceable.
What happens if you break an NDA in the UK?
Breaking a non-disclosure agreement can have serious legal and financial consequences. The outcome depends on the terms of the NDA, the nature of the breach, and the impact of the disclosed information. Here’s what could happen if you violate an NDA:
1. Legal action
If you break an NDA, the affected party can take legal action against you. This could result in court proceedings, where you may be required to:
Pay compensation for any financial losses caused by the breach.
Cover legal fees and damages incurred by the other party.
Defend yourself in civil court, which can be costly and time-consuming.
💡 Key point: If the breach leads to financial harm, the affected party may sue for damages to recover their losses.
2. Financial penalties and fines
Many NDAs include financial penalty clauses, which outline pre-agreed fines or damages if confidential information is leaked. The amount may depend on:
The severity of the breach - a minor disclosure may result in a warning, while a major breach could lead to significant fines.
The contract terms - some NDAs include fixed penalties, while others assess damages based on the
harm caused.
3. Injunctions to prevent further disclosure
If confidential information is leaked, the affected party can apply for a court injunction. This is a legal order that stops you from sharing any more information. If you ignore the injunction, it could lead to contempt of court charges, which may result in heavy fines or imprisonment in extreme cases.
4. Employment termination
If an employee breaches an NDA with their employer, they may face:
Disciplinary action or an official warning.
Immediate dismissal, depending on the severity of the breach.
Liability for financial losses, meaning they could be required to compensate the company for damages.
5. Criminal liability (in serious cases)
Most NDA breaches are handled as civil matters, but in extreme cases, breaking an NDA could result in criminal charges. This applies if the disclosure involves:
Government documents or national security information.
Trade secrets that affect national interests.
Sensitive financial data that leads to fraud or insider trading.
Can you get out of an NDA?
Getting out of an NDA is not always easy, but there are circumstances where it may be possible:
Mutual agreement: If both parties agree, they can end the NDA. This is often the simplest way to be released from an NDA.
Expiration of the NDA: Many NDAs have a fixed duration. If the agreement has expired, you are not legally bound by its terms.
Material breach by the other party: If the party that issued the NDA fails to follow their own rules, you can challenge its enforceability.
Public interest exemptions: UK law protects those who reveal information in the public interest. This could be reporting illegal activity, fraud, or public safety concerns. If an NDA is used to cover up wrongdoing, it may not be enforceable.
Unenforceable or unreasonable terms: If an NDA is not specific enough, too restrictive, or unfair, it may not be upheld in court. A legal professional can decide whether the agreement stands under UK contract law.
Information already in the public domain: The NDA may no longer apply if the confidential information is made public through legal means.
Court ruling: If a dispute arises over an NDA, a court may determine that it is not valid due to unfair clauses. There could be a lack of consideration or an unreasonable restriction on trade.
💡Editor's insight: "I always recommend seeking legal advice if you are in an NDA and want to be removed from it. A solicitor can look at your agreement and help you decide on the best course of action. They can help you decide whether to negotiate with the other party or if you need to take court action to end the NDA.”
Four essential tips on NDAs
1. Read the NDA Carefully Before Signing
Before signing an NDA, it’s crucial to understand exactly what you’re agreeing to. The agreement should clearly define what information is considered confidential, how long the NDA will be in effect, and the consequences of breaking it. Some NDAs last indefinitely, while others have a set time limit, so always check the duration.
2. Negotiate unclear or unfair terms
Not all NDAs are created fairly - some can be overly broad, restrictive, or unclear. If an NDA seems too one-sided or limits your rights unfairly, you have the right to negotiate before signing. You can request changes, such as limiting the scope of confidentiality, setting a reasonable expiration date, or adding exceptions for disclosures required by law. If you feel pressured to sign an unfair NDA, consulting a legal expert can help you push back on unreasonable terms and protect your interests.
3. Store confidential information securely
Once you’ve signed an NDA, you’re responsible for keeping confidential information safe and secure. This means storing digital documents securely, using password protection and encryption, and restricting access to only those who need it. Be cautious about discussing confidential matters in public or casual conversations, as even an accidental disclosure could be considered a breach. If you realise you’ve accidentally shared protected information, inform the other party immediately to minimise potential legal consequences.
4. Seek legal advice if you’re unsure
If you have any doubts about an NDA - whether you’re about to sign one or considering disclosing information covered by an existing agreement - it’s always best to seek legal advice first. A small business solicitor can help you understand your rights and risks, ensure the NDA is fair and enforceable, and advise you on what to do if you need to break it. Taking the time to get expert guidance can help you avoid costly legal mistakes and ensure you’re fully protected.
FAQ
What happens if you break an NDA accidentally?
Accidental breaches can still have consequences, depending on the impact of the disclosure. If you believe you have breached an NDA by accident, tell the other party immediately and seek legal advice.
Can you be sued for breaking an NDA?
Yes, the party that issued the NDA can sue for damages. They could also take out an injunction to prevent further disclosures.
Can NDAs be used to cover up illegal activities?
No, NDAs can't prevent whistleblowing or reporting unlawful behaviour. If an NDA attempts to stop someone from reporting misconduct behaviour, this is unlikely to be enforceable by law.
Are NDAs permanent?
NDAs usually have a set duration, but some may be ongoing. This depends on the type of protected confidential information.
Final thoughts
Breaking an NDA can have serious consequences, including legal action and financial penalties. Whether you are signing an NDA or part of one, you need to know your rights and obligations. If you're unsure about the terms of an NDA or need to disclose protected information, seek legal advice.
References
Using non-disclosure agreements by ACAS
Contempt of court by Gov.UK
Disclaimer: This article only provides general information and does not constitute professional advice. For any specific questions, consult a qualified legal professional.
