A Non-Disclosure Agreement (NDA) (also known as a Confidentiality Agreement in Australia) offers your business protection where sensitive information is disclosed to someone and you wish to prevent them from disclosing it to anyone else. Colloquially referred to as a ‘gag order’, Non-Disclosure Agreements legally prohibit someone from disclosing information that they have become privy to. Non-Disclosure Agreements are also common where legal disputes reach an out-of-court settlement.
But what do I do if this person already possesses the information I wish to protect, or if they have had this information for awhile and I realise now that I need to protect it?
Read on to find out.
The Problem with ‘Backdating’ Legally Binding Agreements
Having an enforceable contract that is backdated is questionable at the best of times. The general reason for this is that people cannot ‘promise’ to do, or not to do, something that applies to the past.
For example, if you had a contract where a condition was to make weekly payments to a company, and it was backdated 6 months, it is quite possible that you have already breached the contract by not making those payments. Conversely, if you were making those payments, and backdated the contract to account for this – it would be acceptable.
Retroactive Non-Disclosure Agreements in the United States
In the case of a Non-Disclosure Agreement (NDA), it is understandable that sometimes important information is disclosed to parties before a Non-Disclosure Agreement can be made. Although there is little precedent in Australia on this issue, the United States’ approach can offer some clarity in that generally a retroactive Non-Disclosure Agreement will be enforceable, but it is wise to consider the following first:
What will the Obligated Party Gain from Signing the Non-Disclosure Agreement (NDA)?
For someone to sign a Non-Disclosure Agreement (NDA), there usually needs to be a benefit of some sort provided to them in exchange for them not disclosing information. For instance, an employee will usually be willing to sign a Non-Disclosure Agreement, as they are being remunerated by the employer or gaining work experience. In this sense, a person may be hesitant to sign an Non-Disclosure Agreement which applies to past information. In the case of a mutual Non-Disclosure Agreement, often both parties benefit equally and therefore both would be more willing to sign an Non-Disclosure Agreement for past information.
Using ‘As of’ Dating or inserting a Retroactivity Clause
Writing in a false date on a contract can carry implications of forgery, and it is generally not common practice to do this.
A way to avoid this is to insert before the date ‘as of’, which indicates the agreement will become effective at a certain date. It may also be worth writing in the actual date of signing below this to ensure validity.
Another option is to insert a clause in the agreement which specifies that the terms of the agreement apply to an earlier date. This way, the agreement will protect past information, but you can also be accurate in having the date of signing on the agreement.
It is not illegal to ‘backdate’ a Non-Disclosure Agreement, but it is not exactly common practice. However, as long as both you and the other party sign, then it will be effective. If you have any questions, it is worthwhile getting advice from a commercial lawyer to ensure that your Non-Disclosure Agreement (NDA) is enforceable.