NDA without a defined maximum liability amount
<p>I would like to ask if it is normal (standard situation) for an NDA to not define the maximum liability amount. Someone can hack my computer or data storage and I inadvertently access confidential information. I see this as too great a risk.</p>
<p>I also don't understand the following wording:</p>
<blockquote>
<p>breach of this Agreement may cause irreparable harm to XXXXXX. Therefore, in addition to any other remedies available to XXXXXX, XXXXXX may obtain injunctive relief in the event of any breach or alleged breach of this Agreement without proving actual damages.</p>
</blockquote>

<p>There is no &quot;normal&quot; or &quot;standard situation&quot;. The parties are free to negotiate whatever terms they like within any limitations imposed by law. If you're unhappy with the proposed terms then you should either negotiate to include a liability limitation clause, refuse to agree the NDA, or consider whether the benefits of signing it outweigh your concerns.</p>
<p>If you are entering into the NDA as a consumer and with a trader, then in <a href="/questions/tagged/england-and-wales" class="post-tag" title="show questions tagged &#39;england-and-wales&#39;" aria-label="show questions tagged &#39;england-and-wales&#39;" rel="tag" aria-labelledby="england-and-wales-container">england-and-wales</a>, you <em>might</em> have some protection from <a href="https://www.legislation.gov.uk/ukpga/2015/15/section/62" rel="nofollow noreferrer">Section 62 of the Consumer Rights Act 2015</a> which provides:</p>
<blockquote>
<p>(1) An unfair term of a consumer contract is not binding on the
consumer.</p>
<p>(4) A term is unfair if, contrary to the requirement of good faith, it
causes a significant imbalance in the parties' rights and obligations
under the contract to the detriment of the consumer.</p>
</blockquote>
<p>For example, a contract which imposes unlimited liability on a consumer, while capping the liability of the trader, could be unfair. This will very much depend on all the circumstances and what the contract as a whole says:</p>
<blockquote>
<p>(5) Whether a term is fair is to be determined — (a) taking into
account the nature of the subject matter of the contract, and (b) by
reference to all the circumstances existing when the term was agreed
and to all of the other terms of the contract or of any other contract
on which it depends.</p>
</blockquote>
<p>A term also can't be assessed for fairness if it specifies the main subject matter of the contract (which arguably a liability clause in a NDA does) and the term is transparent and prominent (see <a href="https://www.legislation.gov.uk/ukpga/2015/15/section/64" rel="nofollow noreferrer">Section 64</a>).</p>
<blockquote>
<h3>&quot;I also don't understand the following wording:</h3>
<blockquote>
<p>...breach of this Agreement may cause irreparable harm to XXXXXX. Therefore, in addition to any other remedies available to XXXXXX, XXXXXX may obtain injunctive relief in the event of any breach or alleged breach of this Agreement without proving actual damages.&quot;</p>
</blockquote>
</blockquote>
<p>What this is saying is that, in addition to all the usual actions that the other party could take against you for breaching the NDA (e.g. suing you for damages in the event that they suffer a loss from your breach), they can <em>also</em> apply to a court for an injunction without needing to prove that your breach caused them any loss. An injunction in this case would be a court order requiring you to stop breaching the NDA (e.g. to stop divulging information subject to the NDA).</p>

<blockquote>
<p>I would like to ask if it is normal (standard situation) for an NDA to
not define the maximum liability amount.</p>
</blockquote>
<p>An NDA is a non-disclosure agreement which is a contract legally compelling someone to keep certain secrets (often called &quot;confidential information&quot;) that are entrusted to them secrets by not disclosing them to anyone you are not authorized to disclose the secrets to under the agreement.</p>
<p>In the absence of a specified amount of &quot;liquidated damages&quot; (i.e. a contractually set fixed dollar amount agreed by the parties for violations that they agree is a reasonable approximation of actual damages that would be suffered from a violation in cases where it is difficult or expensive to prove actual damages) for violations of the NDA, the damages remedy for a breach of the NDA is limited to actual damages incurred and proven at trial as a result of the breach of the agreement.</p>
<p>An NDA without a liquidated damages provision is usually considered weaker than one that only allows an award of actual damages, because proving that harm is caused by the disclosure of secrets is often expensive and difficult to prove.</p>
<p>For example, one common reason to require an NDA is to protect the firm's trade secrets, which can't be protected by patent law or copyright law, such as a secret blend of herbs and spices in a recipe.</p>
<p>If disclosure of the NDA protected secrets caused the firm requiring the NDA to see its profits suddenly plummet by 50% as competitors made identical products with its secret recipe that has been disclosed by someone breaching the NDA, then the lost profits would be the amount of damages that could be awarded.</p>
<p>Having everyone who has access to trade secrets sign an NDA is typically one of several measures that have to be taken to protect the secrecy of a trade secret for it to be legally protected. But, once a trade secret really is legally protected, it is both the basis for a lawsuit, and a mid-level felony crime, to steal that trade secret.</p>
<p>While liquidated damages clauses are not uncommon in an NDA, a defined maximum liability amount in an NDA would be unusual.</p>
<blockquote>
<p>Someone can hack my computer or data storage and I inadvertently
access confidential information. I see this as too great a risk.</p>
</blockquote>
<p>An NDA is governed by contract law principles that aren't particularly fault based.</p>
<p>But usually the contract language itself will require that you take some affirmative action to wrongfully disclose the confidential information protected by the NDA to be exposed to legal liability.</p>
<p>If you take all of the protective measures explicitly required by the NDA to protect the covered secrets and use reasonable care to prevent yourself from being hacked (like not using 123456 for all of your passwords), you aren't exposed to a meaningful risk of legal liability if someone uses illegal means like hacking to steal the secrets. This kind of hacking would usually be a criminal intervening cause that would usually absolve you of liability for the data breach under the terms of the agreement itself.</p>
<blockquote>
<p>I also don't understand the following wording:</p>
<p>breach of this Agreement may cause irreparable harm to XXXXXX.
Therefore, in addition to any other remedies available to XXXXXX,
XXXXXX may obtain injunctive relief in the event of any breach or
alleged breach of this Agreement without proving actual damages.</p>
</blockquote>
<p>Language along these lines is very standard and is found in almost every NDA and also in lots of other kinds of contracts.</p>
<p>&quot;Injunctive relief&quot; is a court order directing someone to refrain from doing something (like using or disclosing secrets), or directing someone to affirmatively do something (like keeping the secrets in a locked safe deposit box at all times).</p>
<p>Suppose someone subject to the NDA goes and starts their own business using its secret recipe or other trade secrets. What this clause does is says that you can get a court to order them to stop using those secrets going forward, in addition to suing them for actual money damages that they have already caused the owner of the secrets the NDA protects to suffer already.</p>
<p>Damage to the secret owner from actions in the future that use or worse yet disclose the secret is considered &quot;irreparable harm&quot; because the economic value of the trade secrets may be permanently destroyed forever once they are widely disclosed. You can't put secrets back under wraps once they've been disclosed to the entire world on the Internet, for example.</p>
<p>The provision that this court order can be obtained without proof of actual damages primarily covers a situation where someone is threatening to imminently disclose the secret owner's secrets in violation of the NDA even though it hasn't actually happened yet. In other words, it authorizes what First Amendment scholars would call a &quot;prior restraint&quot; on future speech that a government couldn't mandate without the contractual agreement of the person subject to the prior restraint on their future speech by signing the NDA.</p>
<p>In those cases, there are no actual damages yet, because the secret hasn't actually been disclosed yet.</p>
<p>Once a court order is in place directing someone not to disclose the secrets covered by the NDA, and the person covered by the court order is aware of its existence, it constitutes &quot;contempt of court&quot; for someone covered by the order, or someone aware of the court order who is somehow meaningfully connected to someone covered by the court order (e.g. their lawyer or PR agent) to violate the court order.</p>
<p>If you are held in contempt of court (something that the secret owner protected by the court order can ask a court to do to someone who violates a court order even though relief like this is usually limited to government prosecutors), a court can incarcerate you for a fixed period of time, can incarcerate you until you comply with the court order, can fine you once or on a per day basis, or can fashion other kinds of relief that are more suitable for punishing you in an exceptional case (e.g. declaring that you lose a related lawsuit because you have disregarded the court's orsers).</p>

liability non-disclosure