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Is it customary for a "Confidentiality and Non-Disclosure Agreement"

to include: 1) a limit of...
Is it customary for a "Confidentiality and Non-Disclosure Agreement" to include:

1) a limit of five years following (rather than in perpetuity) for the terms of the agreement to survive the expiration or termination of the Agreement.

2) a provision that the Employer will reimburse the Consultant for any cost of legal counsel the Consultant is required to retain when responding to a court order or lawful legal process.
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Answered in 3 minutes by:
12/3/2011
Dimitry K., Esq.
Category: Business Law
Satisfied Customers: 41,221
Experience: Run my own successful business/contract law practice.
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Thank you for your question.

I will do my best to answer each of your concerns.

1) a limit of five years following (rather than in perpetuity) for the terms of the agreement to survive the expiration or termination of the Agreement.
Actually a term limit of some kind is extremely, as a contract in perpetuity is considered to be overbroad and overreaching (and therefore far likelier to be successfully contested in court). Please be aware however that even a five year length is fairly long as typically the courts permit a contract to last generally no more than two or three years.

2) a provision that the Employer will reimburse the Consultant for any cost of legal counsel the Consultant is required to retain when responding to a court order or lawful legal process.
That is also permitted and is also common, but is generally capped with language which generally states that the employer has to reimburse if the consultant actually prevails with his litigation.

Good luck.
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Customer reply replied 6 years ago
It didn't occur to me that the consultant would litigate, much less "prevail with his litigation" - can you give me an example of why this might happen? Meanwhile, I can see that if I'm the litigator alleging breaking the agreement, I might agree to reimburse the consultant for legal fees if I don't prevail. A final question relates to whether the consultant might be legally required to break confidentiality in a circumstance involving an allegation of fraud or terrorism - can this happen?
Thank you for your follow-up.

I really cannot say why this might happen by the specific example that comes to mind is that this agreement is to restrictive and too expensive in time and in subject matter. If this contract is longer than two years, there is a perception and a legitimate concern brought to the courts that it is an unreasonable restraint on personal business that the consultant in that case is going to suffer. Therefore that gives him the right to attempt to breach the contract under these equity grounds. In terms of breaking confidentiality agreement on allegations of fraud or terrorism, that is a possible claim for whistleblowing and is a separate issue that would still have to be litigated. In essence the consultant will first have to go to court and attempt to point out his reasons as to why the judge should allow him to wait out the contract. Typically a good argument there might be that the contract itself might be illegal and since the contract is illegal, it is automatically void.

Good luck.
Dimitry K., Esq.
Category: Business Law
Satisfied Customers: 41,221
Experience: Run my own successful business/contract law practice.
Verified
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