Legal Question in Business Law in Illinois

Nondisclosure Agreement

What does this mean?

The Receiving Party agrees to stop from using any requirement for securing or posting of any bond in connection with such remedy.

Asked on 3/30/08, 8:08 pm

1 Answer from Attorneys

Steve Imparl Law Office of Steven D. Imparl

Re: Nondisclosure Agreement

For this answer, I am assuming that the nondisclosure agreement defines the "Receiving Party" as the person or business to whom certain confidential information or trade secrets are disclosed. Because you have quoted only one sentence from the agreement, I am giving a pretty general response that might be limited in its usefulness.

That said, nondisclosure agreements very commonly allow the person disclosing the confidential information or trade secrets (often called the "Disclosing Party" in the agreement) to seek a court injunction against the "Receiving Party" if the "Disclosing Party" learns that the "Receiving Party" has violated or is about to violate the agreement by disclosing the information to some third party. Because disclosing that information could irreparably harm the "Disclosing Party," even if the "Receiving Party" were to pay monetary damages to the "Disclosing Party," injunctions are a common remedy used to prevent a breach of the agreement.

An injunction is a court order that prohibits a person from doing something (such as disclosing confidential information in violation of a nondisclosure agreement) or, less commonly, requires that person to do something. In this case, the injunction would be a court order prohibiting the "Receiving Party" from disclosing the confidential information to any third parties who are not authorized to receive it.

Because injunctions can be a severe remedy and can harm the person whose behavior is enjoined, the court will likely require the person seeking the injunction (here, the "Disclosing Party") to secure and post a bond to compensate the "Receiving Party" for any harm he, she, or it suffers as the result of the court's issuing the injunction, if the court grants the injunction by mistake.

The wording of the sentence you have quoted is slightly unconventional, so this is the most precise answer I am comfortable giving at the moment. Thanks.

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Answered on 3/31/08, 4:08 am

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