Make a New Jersey Non-Disclosure Agreement

New Jersey State Laws

Non-disclosure agreements and trade secrets are regulated by N.J. Rev. Stat. §§ 56-15-1 through 56-15-9 . This is known as the New Jersey Uniform Trade Secrets Act. New Jersey’s Uniform Trade Secrets Act also explains when businesses are entitled to damages as well as the three-year limitation on the ability to take legal action .

A recent amendment known as NJLAD (New Jersey Law Against Discrimination) prohibits the use of an NDA in employment contracts to conceal any claim of discrimination, retaliation claims, or harassment claims. Collective bargaining agreements, NDAs, and non-compete agreements are excluded from NJLAD. Additionally, any provision in an employment contract that waives a procedural right or is otherwise inherently against public policy is considered unenforceable under the new law.

New Jersey businesses should also consider using a New Jersey non-competition agreement to protect their interests.

Definition of “Trade Secrets”

Because the purpose of a New Jersey non-disclosure agreement is to legally protect trade secrets, it’s important to know how the New Jersey Uniform Trade Secrets Act defines the term “trade secrets.” N.J. Rev. Stat. § 56:15-2 defines a trade secret as information held by one or more person in a business that may be a formula, pattern, compilation of business data, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype, or process with its own actual or potential financial value.

A trade secret’s value occurs because the information isn’t general knowledge that the public has or that is something that can easily be determined by another business for their economic advantage. The business claiming information as a trade secret must take reasonable steps to keep that information private.

How to Write a New Jersey Non-Disclosure Agreement

To write a basic New Jersey non-disclosure agreement, it's important to review both the Uniform Trade Secrets Act and NJLAD. Because the laws are complex in New Jersey, it's important to get qualified legal advice to ensure that your NDA is properly drafted if you need to protect your business from a former employee.

• The opening paragraph identifies the parties. The Disclosing Party is the business with the trade secrets that must be protected. The Receiving Party is the third-party who will have access to the information. Then, the purpose of the agreement is explained: to prevent the misappropriation of the confidential information. Because an NDA is a legal document, an effective date is also listed in this paragraph.
• The definition of "trade secret" according to New Jersey law. The law defines it as information held by one or more persons in a business such as a formula, pattern, compilation of business data, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype, or process with its own actual or potential financial value. This value exists because this information isn't available to the general public or other businesses. Your business must take reasonable steps to protect this information.
• Exemptions to confidential status. There will be times when the information will not be considered confidential. Common exemptions include when information is released to the public because of NJLAD exemptions, when information is released to the public at no fault of the receiving party, something discovered or created by the receiving party before it is given to the disclosing party, something learned by the receiving party by a legitimate method without the assistance of the disclosing party or their agent, or something shared by the receiving party with the written consent of the disclosing party.
• Obligations of the receiving party. The most common contractual obligations include keeping the information in the highest confidence, carefully restricting access to the information, seeking assistance through the proper channels to understand when information should be released in compliance with NJLAD if necessary, and not using the information for the receiving party's sole benefit without the written consent of the disclosing party.
• Relationship clause. Some New Jersey non-disclosure agreements will benefit from a relationship clause as it states that the NDA contains no language that makes either party a partner, joint venturer, or employee of the other.
• Jurisdiction clause. This clause is used to state that New Jersey laws will be used to govern the agreement as well as to mediate any disputes that may arise.
• Severability clause. This clause is used to keep the remainder of the NDA in effect if a New Jersey court holds one clause as invalid.
• Integration clause. This clause is used to show that the parties agree that the NDA expresses their complete understanding of the subject matter and that the agreement overrides all previous proposals, agreements, representations, and understandings. It also states that the NDA may only be amended in writing and that the parties must also sign the amendment.
• Waiver clause. This clause states that if a party fails to exercise any rights presented in the NDA, they do not waive any prior or subsequent rights.

The Disclosing Party and the Receiving Party must sign the NDA as well as print the names. Their signatures should be dated. Both parties should receive a copy of the finalized contract for their records.