An NDA is only as useful as what you can do when someone breaks it. Under the law of England and Wales a breach of an NDA is a breach of contract, and misuse of confidential information can also be a breach of confidence under the general law, whether or not there is a contract. The remedies overlap, and how they work tells you what to put in the NDA and how quickly to act if something goes wrong.
The remedies available
There are four main remedies. Damages compensate you for the loss the breach has caused. An injunction is a court order stopping someone from disclosing or using the information, either temporarily while the case is decided or permanently at the end of it. An account of profits requires the wrongdoer to hand over the profit it made from misusing the information. The court can also order delivery up or destruction of documents and material containing the information.
You generally can’t have both damages and an account of profits for the same wrong. You choose, usually once you have enough information to know which is worth more.
Injunctions are discretionary
Damages for breach of contract are available as of right once you prove breach and loss. Injunctions aren’t. They are a discretionary remedy, which means the court decides whether granting one is fair and proportionate in all the circumstances. Your own conduct, any delay and whether damages would put things right all count.
Many NDAs say that damages may not be an adequate remedy and that the disclosing party may seek an injunction. That wording is worth including, and a court can take it into account, but it doesn’t bind the court or guarantee an order. If the information is already widely public, or if you’ve delayed for months, a clause in the contract won’t rescue the application.
Interim injunctions and why speed matters
The injunction that usually matters most is the interim one, obtained at the start of a dispute to hold the position until trial. In deciding whether to grant it, the court will normally ask whether there is a serious issue to be tried, whether damages would adequately compensate either side, and where the balance of convenience lies. In urgent cases an application can be made at very short notice, and occasionally without notice to the other side, though the court will then expect a good reason and full and frank disclosure of anything that counts against you.
Two practical points follow. First, the applicant is normally required to give a cross-undertaking in damages, a promise to compensate the other side if it later turns out the injunction shouldn’t have been granted. That can be a real financial risk. Second, delay is damaging. If you learned of the problem weeks ago and did nothing, the court may conclude it can’t have been that urgent. Where an order would restrict publication and freedom of expression is engaged, the Human Rights Act 1998 also sets a higher bar for interim relief.
Where information has already been misused, the court can sometimes grant a “springboard” injunction, preventing the other party from benefiting from the head start it got by misusing the information, for a limited period. These are fact-specific and not easy to obtain.
Breaching an injunction is contempt of court, which can lead to a fine, seizure of assets or imprisonment. That is what gives injunctions their force.
Damages: what you can recover
In principle you can recover the financial loss the breach caused. Say a competitor learned your pricing through a leak and used it to win customers you would otherwise have kept: the lost profit on those customers is the obvious claim. In practice you need to prove the breach, show the information actually reached and was used by the person who harmed you, and link that use to a loss you can put a number on. Each step can be hard, and courts won’t award damages for loss that is speculative.
Where the loss is difficult to prove, the court may instead assess damages by reference to what a reasonable fee for a licence to use the information would have been. Whether that approach is available depends on the facts, so don’t assume it. The usual rules on causation and remoteness apply, and you’re expected to take reasonable steps to limit your loss once you know about the breach.
Account of profits
An account of profits focuses on what the wrongdoer gained rather than what you lost. It can be attractive where the other party has made money from your information but your own loss is hard to show. It is also a discretionary remedy, and working out which profits are attributable to the misuse (rather than to the wrongdoer’s own effort and resources) can be complicated and expensive.
Clauses in the NDA that affect remedies
A few clauses make a real difference when it comes to enforcement. An indemnity can let you recover losses and costs more directly than an ordinary damages claim, though recipients often resist one. A fixed sum payable on breach avoids arguments about quantifying loss, but it must protect a legitimate interest and not be out of all proportion to it, or it risks being struck down as a penalty. Check whether the NDA, or a wider contract it sits within, contains a limitation of liability that caps claims for breach of confidentiality; disclosers usually want confidentiality breaches excluded from any cap. Clear governing law and jurisdiction clauses save a separate fight about where the case is heard.
What makes NDAs hard to enforce
The most common problem is evidence. Leaks tend to happen quietly, and proving who disclosed what, and when, can take time and money. The second is showing the information was confidential in the first place. If it was loosely shared, not marked, or partly in the public domain, the other side will say it falls outside the NDA. The third is causation: even where a breach is clear, the loss may have had other causes. Finally there is cost. Litigation is expensive, and even a successful claimant rarely recovers all its legal costs, so the value at stake needs to justify the fight.
If you think there has been a breach
Start by preserving evidence: the NDA itself, records of what was disclosed and when, who had access, and anything showing the information being used. Act promptly, particularly if you may want an injunction. Get legal advice early, because the choice between a firm letter, an urgent application and a negotiated outcome depends on facts that are hard to judge from the inside.
Many cases end without a trial. A letter before claim will often produce written undertakings not to use or disclose the information further, the return of documents, and sometimes a payment. If the NDA requires mediation or arbitration before court proceedings, follow that process, though a clause of that kind won’t normally stop you seeking urgent interim relief from the court. The limitation period for a claim for breach of contract is generally six years from the breach under the Limitation Act 1980, but if you want an injunction you should be thinking in days and weeks, not years.
The time to make an NDA enforceable is before anyone signs it: a clear definition, a purpose clause, sensible exclusions and remedies that fit the information at stake. If you’d like yours checked, upload it to QuickLegalCheck for a review.
Related: what the NDA review covers, and a complete sample report.