Threatening NDA clauses
Thread poster: Niels Stephan

Niels Stephan  Identity Verified
Germany
Local time: 21:31
Member (2009)
English to German
Feb 1, 2012

Like most of you (I guess) I am not a legal expert. Nevertheless we are asked to sign legally binding documents all the time.
I was asked by some new clients to sign NDAs this year and - to my belief contrary to the ones I signed in the last years - several of them had a section that said something along the lines of:

The Receiving Party acknowledges and agrees that there can be no adequate remedy at law for any breach of its obligations hereunder and therefore the Disclosing Party shall be entitled to appropriate equitable relief, without the requirement of posting a bond or surety, in addition to whatever remedies it might have at law.

1) The problem is that you can be as careful as you want, we just can not rule out with safety that - by what incident whatsoever - a NDA gets violated. To me it looks unacceptable to have an existence-threatening punishement with that.
Usually when you ask the person who send the NDA (not the legal expert either) you get an answer like "Oh, don't you worry, that is just bureaucracy." Not to me, I'm afraid.
Am I too paranoid?

2) Furthermore I do not understand how that would work out in reality. The disclosing party says "Well, the court said that you violated the NDA and that you have pay us (say) 50k. Now we think - and you agreed to that - that it is not enough, our real damage is (say, again) 2 Million." Then I say "Sounds fair to me, let me get this from the bottom drawer of my desk." How do they imagine that this would work out? Is it even _legally possible_ (and binding?) to agree on something "in addition to the law"?

3) Naturally everybody hopes that nobody is ever forced to get that old NDA out of the drawer and undust ist. I have never heard of a translator who really ran into trouble for it. (Might be due to my ignorance.) Are there reported cases? I guess these things aren't only crafted for the head of legal was bored that day. What really happened in these cases?

I would be happy to hear about the gut feeling of my experienced colleagues. Additionally if somebody with some legal background/knowledge would care to elaborate, that would be highly welcome too.

Thanks in advance!


 

cranium
French to English
+ ...
Not too paranoid Feb 1, 2012

The court said that you violated the NDA and that you have pay us (say) 50k. Now we think - and you agreed to that - that it is not enough, our real damage is (say, again) 2 Million."


You are not too paranoid, and your interpretation is bang on.

Not only should this contract not be signed, but it should serve as a big warning flag regarding the mentality at the company that prepared it.

Also remember your right as service provider to have your client sign your terms and conditions.


 

David Wright  Identity Verified
Austria
Local time: 21:31
German to English
+ ...
Perhaps not as bad as it seems Feb 1, 2012

What is "equitable releief"? Under English law this has some a meaning, see Wikipedia for details. In another legal system this is probably utterly meaningless. A distinction is being made between law and equity.

The vagueness and excessive legalese of the clause would have difficulty standing up in a court of law.

However what I suspect that what they really mean is that you will not just be liable for paying a penalty for any breach (= remedy under law), but also be required by the court actually not to do it (remedy under equity). Thus you would not be allowed to infringe the NDA, pay a penalty and then draw huge profits from the breach (if you could!)

Your worries about things happening by accident etc would aply to any NDA agreement Any infringement, whether deliberate or accidental, of an NDA would be subject to penalty. The clause does NOT say that the company can impose a penalyt of whatever amount it feels suitable - any remedies under law (i.e. the imposition of a penalty) would need proof of the amount lost. However, if the actual damage suffered is indeed USD 2 million - and you ought to have been able to foresee this fact - then you'd have to pay it. Good reason for legal insurance.

Nor soes this mean that the court could award 50k damages and then the company claims more.

[Edited at 2012-02-01 12:15 GMT]


 

David Wright  Identity Verified
Austria
Local time: 21:31
German to English
+ ...
Right to get them to sign your terms? Feb 1, 2012



Also remember your right as service provider to have your client sign your terms and conditions.


Where did you derive this right from? There is no such thing. These issues have to be negotiated and generally the stronger partner gets his terms through. If I as translator need ths agency's work, I'll have to accept their terms. If they desperately need me cos I'm the only translator who does translations of contracts from Uighur into a Native American language, then they'll have to accept my terms or I won't work for them.


 

Aisha Maniar  Identity Verified
Local time: 20:31
Member (2003)
Arabic to English
+ ...
Strike out Feb 1, 2012

Personally, I think this clause sounds fairly standard - once said breach has been made, you can't put the genie back in the bottle... Nonetheless, this is a case for having professional liability insurance, which I assume most of us don't.

However, a contract - and an NDA - is an agreement between two parties and if there are particular clauses you disagree with, you have the right to not agree to a certain part of it. I would explain to the client that - if this is the case - that you agree with the rest of the NDA but wish to modify or strike out the clause for the following reasons: XXX. If they agree, run a pen through it and sign up to the rest. If not, and you don't want to sign it on that basis, let it go. There are other clients out there.

I've done this a few times when I've felt the terms of an agreement - NDA/ T&C - were too strict and impracticable and I've not had a client complain, provided you're not saying that you disagree with the broader points/ essence of the agreement.

As David also says, the clause seems to make a difference between "equitable remedies" and "remedies at law". I'm not sure that your client is English - might be American/Canadian - but such remedies are not always monetary, e.g. an injunction to prevent further disclosure, and has its own rules of fairness and the conditions under which such a claim can be made. Out of curiosity, are these NDAs for direct clients or agencies? At least in my view, this would be much harsher coming from an agency.

If that's of any help...


 

Niels Stephan  Identity Verified
Germany
Local time: 21:31
Member (2009)
English to German
TOPIC STARTER
Both client types from various countries Feb 1, 2012

Aisha Maniar wrote:

I'm not sure that your client is English - might be American/Canadian


Clients are from other European countries.


Out of curiosity, are these NDAs for direct clients or agencies? At least in my view, this would be much harsher coming from an agency.


I've got similar texts from direct clients and from agencies.

To be honest for the agencies I suspect they might take what they received and signed themselves, put their name at the top and forward it. I am not sure they all employ or consult legal experts to come up with these texts on their own or even check if it makes sense under the law of their own country.

Or they copy it together from several sources. It's okay as long as it sounds threatening enough. Would fit wonderfully with my experience that nobody can ever tell you what these texts really mean.

Thnaks for all your answers so far!


 

John Fossey  Identity Verified
Canada
Local time: 15:31
Member (2008)
French to English
Limiting liability Feb 1, 2012

I never sign an agreement that provides for potential liability beyond the amount paid. I would strike out such a clause and replace it with my own. My insurance company pointed out that having such a limitation to my liability can dramatically reduce the cost of insurance - even if I've never heard of such a limitation having to be enforced, the insurers see it as limiting their exposure.

 

cranium
French to English
+ ...
My terms are attached to each quote Feb 1, 2012

David Wright wrote:
Also remember your right as service provider to have your client sign your terms and conditions.

Where did you derive this right from? There is no such thing.


The Société Française des Traducteurs has a set of recommended T&C on its website. One of the first clauses states that the translator's T&C prevail over the client's. For those who understand French, it is really interesting reading. http://www.sft.fr/cgps-de-traduction-sft.html


 

Daniela Slankamenac  Identity Verified
Serbia
Local time: 21:31
Member (2011)
English to Serbian
NDAs Feb 1, 2012

Honestly, I've considered these NDAs as formality, thinking of them only as a kind of written proof that I will not reveal any confidential information (which I wouldn't do anyway). Some of them are short, but some are pretty long and I didn't go into every single detail of it. But, this discussion made me think.
So, my question is...
Has anyone ever had any kind of problem after signing an NDA?


 

David Wright  Identity Verified
Austria
Local time: 21:31
German to English
+ ...
re SBlack Feb 2, 2012

Problem: These standard terms do not apply automaticaly. 1) Not many translators actually attach their terms to their quotes (if they did, a lot of their problems would be solved). 2) What happens if your terms and the terms of your client (which are sent to you) are different? You still have to negotiate.

 


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Threatening NDA clauses

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