What Happens If You Break An NDA? (2026)
Contributor
Reviewed By Adam Ramirez, J.D.
Editor
Summary
- What happens if you break an NDA depends on the specific agreement
- The NDA should outline whether a lawsuit, mediation or arbitration follows
- You may need to pay damages, and a court may issue an injunction
A non-disclosure agreement (NDA) is an agreement that protects private or confidential information. Many employers ask employees to sign NDAs to protect trade secrets and sensitive corporate information, but private individuals may create them, too.
What happens when you break an NDA? Usually, the next steps are outlined in the contract. Here’s a look at common scenarios.
Understanding Non-Disclosure Agreements and How They Work
Non-disclosure agreements (NDAs) contain promises to refrain from disclosing protected information. Those promises differ in a mutual vs. unilateral NDA.
In a mutual NDA, the parties usually agree to hold each other’s information confidential. In a unilateral NDA, one party agrees to keep information confidential, while the other party promises something in return, such as a payment, a job or the dismissal of a lawsuit.
Consequences and Penalties for Violating an NDA
The NDA itself should outline the consequences of a breach. If it doesn’t, the breach may be resolved in court through a lawsuit.
However, an NDA can also use mediation or arbitration to resolve a breach. This is often a good option since these procedures can be conducted confidentially, while lawsuits are often public.
The NDA may also describe the penalties for a violation. If the NDA is silent, a court can award money damages based on the harm to the non-breaching party.
A court may also issue an injunction preventing any further disclosure. For example, in Massachusetts, a court can grant an injunction upon a showing of irreparable harm. Since public disclosure can’t be taken back, the harm is often irreparable.
Real-World Examples of NDA Violations
NDAs cover all forms of disclosure, including disclosures you might consider harmless. For example, you might disclose information to your spouse. This disclosure breaches the NDA, though, because your spouse might further disseminate the information.
Another example occurs when someone anonymously posts confidential information online. Even an anonymous post breaches an NDA, and you can face a lawsuit if the post is traced back to you.
When You Can Legally Break an NDA
NDAs are enforceable in many cases, but they don’t provide unlimited protection. There are a few scenarios where you may be legally allowed to break an NDA.
The Other Party Breached the Agreement First
Under the business law of most states, you might have the authority to breach an NDA after the other party breaches it. For instance, if the other party fails to pay an amount promised in the NDA, you might be allowed to disclose the information.
You Need to Report Legal Violations
Federal law (and many state laws as well) protect employees who break NDAs to report violations of the law. In 2012, the Whistleblower Protection Enhancement Act extended whistleblower protections to cover people who break NDAs to report fraud, waste or abuse.
You Need to Report Sexual Assault or Sexual Harassment
Unfortunately, some businesses and individuals attempt to use NDAs to silence victims of sexual assault and sexual harassment. The Speak Out Act of 2022 invalidates pre-dispute NDAs for cases involving sexual harassment and assault.
A Court Compels You to Testify
If you receive a subpoena or the court has otherwise ordered you to disclose something in an NDA, you may not be held legally liable for violating the NDA.
A Court Determines the NDA Is Overly Broad
Not all NDAs are enforceable. If an agreement doesn’t clearly define what information is protected or makes it unreasonably difficult for you to work in your field, a court might decide that it isn’t enforceable.
However, if you think your NDA isn’t legally enforceable, you should consult an attorney before breaking it. If it turns out that you were mistaken and the agreement is valid, you could be liable for thousands of dollars in economic damages, legal fees and other expenses.
How to Avoid Breaching an NDA
The best way to avoid breaching an NDA is to make sure you understand your obligations from the beginning. Take note of what information the NDA covers, and review what you can and cannot do with that information. If you have any difficulties, consult a contract lawyer.
Need More Help on Understanding NDAs?
At ConsumerShield, we are dedicated to helping people understand their legal rights. If you have more questions about NDAs, explore our available tools and resources today.
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Frequently Asked Questions
NDAs covering certain information, like rape or sexual assault, may be unenforceable. If you breach this type of agreement, you may need to prove its invalidity in court.
You can argue that the NDA’s terms were too vague for you to understand. You can also argue that the contract was invalid because you didn’t voluntarily agree to it.
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