Establishes what remedies are available for breach, including specific performance, monetary damages, and equitable relief. Critical for enforcement and deterrence.
A remedies clause in an NDA specifies what happens when someone breaches the confidentiality obligations. This typically includes multiple types of relief:
Injunctive Relief: Court orders to immediately stop ongoing breaches or prevent threatened disclosures. This is often the most important remedy because once a secret is out, money cannot undo the damage.
Specific Performance: A court order requiring the breaching party to perform their obligations (e.g., return documents, stop using information).
Monetary Damages: Financial compensation for losses caused by the breach, including actual damages, consequential damages, and sometimes liquidated damages.
Equitable Relief: Broader court-ordered remedies beyond just injunctions, including constructive trusts or accounting of profits.
These clauses often include presumptions about irreparable harm and waivers of certain procedural requirements (like posting a bond) to make emergency relief easier to obtain.
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Why This Clause Matters
Speed of Response: When confidential information is about to be disclosed, you need immediate relief. A well-drafted remedies clause streamlines the process of getting an emergency injunction.
Irreparable Harm Presumption: Without this clause, you must prove at a hearing that money damages are inadequate. The clause pre-establishes this, shifting the burden to the other side.
Bond Requirements: Courts normally require the party seeking an injunction to post a bond. Waiving or minimizing this requirement is critical for smaller companies.
Cumulative Remedies: The clause should clarify that injunctive relief is in addition to, not instead of, monetary damages. You want all available remedies.
Deterrence Effect: A strong remedies clause signals that breaches will be pursued aggressively, encouraging compliance.
Attorneys' Fees: Some clauses include fee-shifting provisions, making the breaching party pay legal costs. This can significantly affect the economics of enforcement.
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Types of Remedies Compared
Temporary Restraining Order (TRO): Emergency court order, often ex parte (without the other side present), lasting 14 days. Fastest but most temporary.
Preliminary Injunction: Court order after a hearing where both sides present evidence. Lasts until trial is completed.
Permanent Injunction: Final court order after full trial. Lasts indefinitely or for a specified period.
Actual Damages: Compensation for provable losses directly caused by the breach.
Consequential Damages: Compensation for indirect losses (lost profits, lost business opportunities). Often excluded or capped in contracts.
Punitive Damages: Damages intended to punish egregious conduct. Generally not available for breach of contract unless fraud or willful misconduct is involved.
Liquidated Damages: Pre-agreed amount payable upon breach. Must be a reasonable estimate of anticipated damages or may be unenforceable as a penalty.
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Clause Versions
Remedies
1. Acknowledgment of Irreparable Harm. Each party acknowledges that a breach of the confidentiality obligations under this Agreement may cause the non-breaching party irreparable harm for which monetary damages alone would be an inadequate remedy.
2. Equitable Relief. In the event of any actual or threatened breach of this Agreement, the non-breaching party shall be entitled to seek injunctive relief, specific performance, and other equitable remedies from any court of competent jurisdiction, without the necessity of proving actual damages.
3. Bond. Any bond or other security required in connection with such relief shall be set at a reasonable amount as determined by the court, taking into account the nature of the confidential information at risk.
4. Cumulative Remedies. The remedies set forth in this section are cumulative and shall be in addition to any other remedies available at law or in equity. The exercise of any remedy shall not preclude or limit the exercise of any other remedy.
5. Attorneys' Fees. In any action to enforce this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and costs from the non-prevailing party.
6. Right to Contest. Nothing in this section shall waive or limit either party's right to contest any application for injunctive or equitable relief in accordance with applicable procedural rules.
Note: This balanced version acknowledges irreparable harm mutually, preserves cumulative remedies, allows for reasonable bond determinations, and includes fee-shifting for the prevailing party while maintaining procedural rights.
Remedies
1. Acknowledgment. Each party acknowledges that a breach of this Agreement may cause harm to the non-breaching party. However, the parties agree that:
(a) The determination of whether such harm is irreparable shall be made by the court at the time relief is sought;
(b) Neither party waives any defense to a claim for injunctive relief, including the defense that legal remedies are adequate;
(c) Any presumption of irreparable harm created by this Agreement is rebuttable; and
(d) The court shall retain full discretion to determine appropriate remedies.
2. Equitable Relief. Either party may seek injunctive or other equitable relief from any court of competent jurisdiction to prevent or restrain any breach or threatened breach of this Agreement. The seeking of such relief shall not be deemed an election of remedies.
3. Bond Requirement. Any injunctive relief shall be subject to the posting of a bond or other security in an amount determined by the court to be adequate to protect the restrained party against damages resulting from a wrongfully issued injunction.
4. Limitation on Damages. Neither party shall be liable to the other for any indirect, incidental, consequential, special, or punitive damages arising from or related to this Agreement, regardless of whether such damages were foreseeable.
5. Exclusive Remedies. Except for claims arising from a party's gross negligence or willful misconduct, the remedies set forth in this section shall constitute the exclusive remedies for any breach of this Agreement.
6. Costs. Each party shall bear its own costs and attorneys' fees in any action relating to this Agreement, except that the court may award reasonable costs to the prevailing party in its discretion.
Why this favors you (as receiving party): Removes automatic irreparable harm presumption, preserves all defenses, requires meaningful bond, excludes consequential damages, limits remedies to those specified, and each party bears its own costs rather than automatic fee-shifting.
Remedies and Enforcement
1. Acknowledgment of Irreparable Harm. The Receiving Party acknowledges and agrees that:
(a) Any unauthorized disclosure or use of Confidential Information WILL cause the Disclosing Party immediate and irreparable harm that cannot be adequately compensated by monetary damages;
(b) The Disclosing Party SHALL BE ENTITLED, as a matter of right, to immediate injunctive relief, temporary restraining orders, preliminary injunctions, and permanent injunctions from any court of competent jurisdiction;
(c) Upon application by the Disclosing Party, the court shall presume that irreparable harm exists and that the balance of hardships favors the Disclosing Party;
(d) The Receiving Party WAIVES any requirement that the Disclosing Party prove actual or threatened damage, demonstrate the inadequacy of legal remedies, or establish a likelihood of success on the merits.
2. Waiver of Bond. The Receiving Party WAIVES any requirement that the Disclosing Party post a bond, security, or other undertaking as a condition to obtaining any form of injunctive or equitable relief.
3. Expansive Jurisdiction. The Disclosing Party may seek relief in any jurisdiction where Confidential Information is located, where the Receiving Party has assets, where the Receiving Party conducts business, or where any breach or threatened breach may occur.
4. Damages. In addition to equitable relief, the Disclosing Party shall be entitled to recover:
(a) All actual damages, including lost profits, lost business opportunities, and diminution in value of the Confidential Information;
(b) All consequential, incidental, and special damages;
(c) Punitive or exemplary damages to the extent permitted by law;
(d) Disgorgement of any profits derived by the Receiving Party from the unauthorized use or disclosure; and
(e) Liquidated damages in the amount of $[AMOUNT] per occurrence of breach.
5. Attorneys' Fees. The Receiving Party shall reimburse the Disclosing Party for all attorneys' fees, costs, and expenses incurred in connection with any actual or threatened breach, including the cost of investigating and remediating any breach.
6. No Limitations. The remedies set forth herein are in addition to all other remedies available at law or equity. The Receiving Party waives any right to assert that any remedy is excessive or disproportionate.
Warning - Highly aggressive: One-sided obligations, automatic entitlement to injunctions without standard showings, complete waiver of bond, punitive damages and disgorgement, fixed liquidated damages, one-sided fee shifting for even threatened breaches, expansive jurisdiction, and waiver of proportionality defenses. Many provisions may be unenforceable.
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Quick Tips
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Make It Mutual: If you're both sharing confidential information, remedies should apply equally to both parties. Resist one-sided provisions.
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Preserve Bond Requirements: Complete bond waivers expose you to frivolous injunction attempts. Accept "reasonable" or "nominal" bond language instead.
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Limit Consequential Damages: Consider excluding or capping indirect damages, especially lost profits and lost business opportunities.
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Review Fee-Shifting: One-sided attorneys' fee provisions create significant litigation risk. Mutual fee-shifting is more balanced.
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Question Liquidated Damages: Pre-set damage amounts must be reasonable estimates of anticipated harm or they may be void as penalties.