Texas Mutual Non-Disclosure Agreement
Texas enforces a mutual NDA as an ordinary contract and protects trade secrets separately under the Texas Uniform Trade Secrets Act. The distinctive Texas issue is the optional employee non-solicitation clause: the Texas Supreme Court has described covenants against soliciting a company's employees as restraints on trade governed by the Covenants Not to Compete Act. A party that recovers on a breach-of-contract claim can also recover reasonable attorney's fees by statute.
What Texas law does to this document
Trade secrets have their own statute
The Texas Uniform Trade Secrets Act protects information only if the owner has taken reasonable measures under the circumstances to keep it secret. The information must also derive independent economic value from not being generally known or readily ascertainable. A signed NDA helps show that secrecy measures were taken. It does not turn ordinary business information into a trade secret.
Tex. Civ. Prac. & Rem. Code § 134A.002(6)What a court can order for misappropriation
A Texas court may enjoin actual or threatened misappropriation, but the order may not stop a person from using general knowledge, skill and experience acquired during employment. Damages can include actual loss and unjust enrichment. If willful and malicious misappropriation is proven by clear and convincing evidence, exemplary damages of up to twice the award are available. The Act leaves contract remedies in place, so a claim for breach of the NDA stands on its own.
Tex. Civ. Prac. & Rem. Code §§ 134A.003, 134A.004, 134A.007(b)An employee non-solicit is a covenant not to compete
In a case about a former employee's covenant, the Texas Supreme Court said that covenants restricting the solicitation of a company's customers and employees are restraints on trade governed by the Covenants Not to Compete Act. Under the Act, the covenant must be ancillary to or part of an otherwise enforceable agreement. It must also contain limits on time, geographic area and scope of activity that are reasonable and no broader than needed to protect goodwill or another business interest.
Tex. Bus. & Com. Code § 15.50(a); Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011)Overbroad restraints are reformed, at a cost
If a covenant is tied to an enforceable agreement but its limits are unreasonable, a Texas court must reform it to a reasonable scope and enforce it as reformed. The price is that the court may not award damages for conduct that occurred before the reformation. Relief is limited to an injunction.
Tex. Bus. & Com. Code § 15.51(c)Attorney's fees for breach of a written contract
Texas lets a person recover reasonable attorney's fees, in addition to the amount of a valid claim and costs, when the claim is for an oral or written contract. Since September 1, 2021, the statute reaches claims against an individual or an organization, with exceptions for quasi-governmental, religious and charitable organizations. The claimant must be represented by an attorney and must present the claim to the other side, and fees are available if the just amount owed is not tendered within 30 days after presentment. The NDA does not need its own fee clause for this statute to apply.
Tex. Civ. Prac. & Rem. Code §§ 38.001(b)(8), 38.002Federal whistleblower immunity notice
This point is federal law. The Defend Trade Secrets Act gives an individual immunity for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law. An employer must give notice of that immunity in any contract with an employee, contractor or consultant that governs confidential information. An employer that omits the notice cannot recover exemplary damages or attorney's fees under the federal act against that individual.
18 U.S.C. § 1833(b)Where people go wrong in Texas
- Leaving the generator's optional employee non-solicitation clause as drafted: it sets a period in months and covers only employees met through the discussions, but it states no geographic area, and Tex. Bus. & Com. Code § 15.50(a) looks for reasonable limits on time, geographic area and scope of activity.
- Assuming the NDA makes everything exchanged a trade secret, when the statute also requires reasonable secrecy measures and independent economic value.
- Relying on an oral or unsigned confidentiality understanding that cannot be performed within one year, which the Texas statute of frauds makes unenforceable (Tex. Bus. & Com. Code § 26.01(b)(6)).
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 Texas already set as the governing state. Download it as PDF or Word. No fee. No account.