New York Mutual Non-Disclosure Agreement
New York protects trade secrets through court-made common law, so the written agreement carries much of the load. Its courts will also enforce a clause choosing New York law for a large commercial deal even when the parties have no other tie to the state. An NDA signed with an individual worker must leave room for the disclosures New York statutes protect.
What New York law does to this document
Trade secrets are defined by case law
New York's highest court decides trade secret claims under common law. It has said there is no generally accepted definition of a trade secret and has relied on the one in section 757 of the Restatement of Torts, comment b. A clear contractual definition of confidential information therefore matters, because the agreement can protect material that might not meet the common-law test.
Ashland Management Inc. v. Janien, 82 N.Y.2d 395 (1993)Damages follow the owner's loss
In 2018 the Court of Appeals held that a plaintiff suing for trade secret misappropriation under New York law cannot measure damages by the development costs the defendant avoided. Recovery is tied to what the owner lost. That makes the injunction clause in an NDA more valuable than a damages claim that may be hard to prove.
E.J. Brooks Co. v. Cambridge Security Seals, 31 N.Y.3d 441 (2018)Choice of New York law and forum
Parties to a contract covering at least $250,000 in the aggregate may choose New York law whether or not the contract bears a reasonable relation to the state. If the transaction covers at least $1,000,000 and the parties also submit to New York jurisdiction, an action may be brought in the New York courts against an out-of-state party. The choice-of-law statute does not reach contracts for labor or personal services or transactions for personal, family or household services.
N.Y. Gen. Oblig. Law §§ 5-1401, 5-1402Multi-year terms must be in writing
An agreement that by its terms cannot be performed within one year is void unless it is in writing and signed by the party to be charged. Most NDAs run longer than a year, so an oral understanding will not do. An electronic signature has the same validity and effect as one made by hand.
N.Y. Gen. Oblig. Law § 5-701(a)(1); N.Y. State Tech. Law § 304(2)NDAs with workers need a carve-out notice
When the other party is an employee, a potential employee or an independent contractor, a clause that prevents disclosure of facts related to a future discrimination claim is void unless it gives a specific notice. The notice must say the person may still speak with law enforcement, the EEOC, the State Division of Human Rights, the Attorney General, a local human rights commission or the person's own attorney. This applies to contracts entered into on or after January 1, 2020.
N.Y. Gen. Oblig. Law § 5-336(2)Six years to sue on the contract
An action on a contractual obligation must be started within six years. A breach of the confidentiality promise is a contract claim, separate from any trade secret claim the owner may also have.
N.Y. C.P.L.R. 213(2)Where people go wrong in New York
- Assuming a New York choice-of-law clause is guaranteed to hold when the deal is worth less than the $250,000 floor in General Obligations Law § 5-1401.
- Using the generator's business-to-business NDA with a job candidate or contractor: it does not contain the agency-disclosure notice that General Obligations Law § 5-336(2) requires in contracts with employees, potential employees and independent contractors, so the notice has to be added.
- Leaving the definition of confidential information vague and counting on trade secret law, which in New York is common law with a damages measure limited to the owner's own losses.
How the generator works
Protect confidential information in both directions before a partnership, deal, or hire conversation. Answer a short interview and the draft assembles as you go, with New York already set as the governing state. Download it as PDF or Word. No fee. No account.