NDA Enforceability in Ontario: What You Need to Know

What Is an NDA?

A non-disclosure agreement (NDA) — also called a confidentiality agreement — is a contract in which one or both parties agree to keep certain information confidential. NDAs are common in business transactions, employment relationships, licensing negotiations, and consulting arrangements.

When Is an NDA Enforceable in Ontario?

In Ontario, an NDA is enforceable as a contract if it meets the basic requirements of a valid contract: offer, acceptance, and consideration. For an NDA signed in the employment context, consideration must be genuine — signing an NDA on the first day of employment as part of the standard hiring package is generally enforceable. Requiring an existing employee to sign an NDA without additional compensation may be unenforceable for lack of fresh consideration unless there is a genuine benefit provided at the same time.

Limits on NDAs in Ontario

An NDA cannot be used to:

• Prohibit a person from reporting criminal activity or regulatory violations to authorities
• Prevent testimony in court or regulatory proceedings
• Suppress information about workplace sexual harassment, sexual assault, or discrimination under the Ontario Human Rights Code (as of Ontario's recent legislative reforms)
• Bind a person to keep information that is already in the public domain

Remedies for Breach of an NDA

If someone breaches an NDA, the non-breaching party can seek: (1) an injunction to stop further disclosure; (2) damages for losses suffered as a result of the disclosure; and (3) in cases of deliberate misappropriation of trade secrets, potentially punitive damages. Proving damages in NDA breach cases can be complex.