In a previous article, I discussed why everyone seems to be talking about NDAs by showcasing their importance for both business and personal usage.
In this article, I will discuss what you should include in your NDAs and whether you can add a non-compete clause to them.
Essentially, non-compete clauses can ensure that other people cannot ‘steal’ your business idea(s) by creating another competing business or engaging in activities that interfere with your business operations. Nevertheless, non-compete clauses can also prevent people from working other jobs although the law doesn’t like that so much.
1. NDAs: What to Include
To draft an airtight NDA, one must include the relevant information that will be classified as ‘Confidential Information’. The more precise the list of information that will be protected as ‘Confidential Information’ in the NDA, the more clear it will be between the Parties as to what is actually classified as ‘Confidential Information’.
Therefore, be careful about using vague language that confuses the receiving party in an NDA, as they may disclose ‘Confidential Information’ without them willingly knowing about it.
‘Exclusions of Confidential Information’ is also another usual clause in NDAs. If the receiving party discloses something that is publicly available information, for example, that receiving party will not have breached the relevant NDA. For instance, if an NDA states that ‘all information learned through the course of business is Confidential Information’ and then the disclosing party tells the receiving party in the course of business that Keir Starmer is the Prime Minister of the UK in 2024, then this cannot classify as ‘Confidential Information’.
Additionally, it’s important to state what the receiving party of the NDA can and cannot do. Therefore, a clause on the receiving party’s obligations is hugely important.
Furthermore, a provision about the disclosing party’s rights if the receiving party breaches that NDA is also common practice. It’s important to outline whether injunctive relief will be provided, for example.
Last but not least, an NDA should also outline clauses such as Governing Law, Entire Agreement, Waiver, and Severability, among other things.
But can it include a non-compete too??
2. Non-Compete
The answer here varies depending on the country and jurisdiction. In the UK, non-competes have been enforceable in the past but nowadays, they are becoming more and more restricted. In fact, the UK Government reportedly wants to limit the application of non-competes to only three (3) months in employment situations.
Additionally, UK courts may strike down a non-compete clause and deem it void, if it is too broad, too wide, unnecessary for the business’ interests and/or if it puts an unfair restraint on trade. In such cases, the UK courts will treat a non-compete clause as unlawful and hence, unenforceable.
Hence, to have a non-compete clause that is enforceable and fits the criteria of the UK courts, it is best to have an expert solicitor either draft it or review it. I love restrictive covenants and they’re a specialism of mine.
If you’re interested in obtaining such a service, get in touch today!
