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Delaware Non-Disclosure Agreement Requirements

Outside a narrow statute for physician agreements, general non-compete and restrictive-covenant enforceability in Delaware runs through Court of Chancery common-law review, under the three-part reasonableness test from Faw, Casson & Co.

Introduction

Outside a narrow statute for physician agreements, general non-compete and restrictive-covenant enforceability in Delaware runs through Court of Chancery common-law review, under the three-part reasonableness test from Faw, Casson & Co. v. Cranston, 375 A.2d 463 (Del. Ch. 1977): reasonable scope and duration, a legitimate business interest, and a favorable balance of the equities. Employees get a separate statutory protection under 19 Del. C. Section 805, which prevents a Non-Disclosure Agreement or employment agreement from reaching an invention an employee developed entirely on their own time, without using the employer's equipment, supplies, facility, or trade secret information, unless the invention relates to the employer's business or resulted from work the employee performed for the employer, placing Delaware alongside California as one of a small group of states with this kind of statute. A Delaware NDA is otherwise an ordinary confidentiality contract, mutual or one-way, in which one or both parties agree to keep specified information secret. Trade secrets shared under a Delaware NDA are separately protected by the Delaware Uniform Trade Secrets Act (6 Del. C. Sections 2001 through 2009), and a misappropriation claim generally must be filed within three years of when the misappropriation was discovered or reasonably should have been discovered. The practical effect for drafting is to keep any invention-assignment language inside the statutory carve-out and to keep the confidentiality definition itself from reading as a disguised restraint on future employment.

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Key Things to Know

  1. 1

    One narrow statutory exception exists: 6 Del. C. Section 2707 voids a covenant not to compete between or among physicians that restricts where or how long a physician may practice medicine after an employment, partnership, or corporate agreement ends, though related liquidated-damages provisions in the same agreement remain enforceable. This statute does not reach ordinary commercial or employment NDAs outside the medical field.

  2. 2

    Delaware is one of a small number of states with a statutory employee invention-assignment carve-out. Under 19 Del. C. Section 805, a provision requiring an employee to assign an invention developed entirely on their own time, without the employer's equipment, supplies, facility, or trade secret information, is unenforceable and against public policy, unless the invention relates to the employer's business or actual or demonstrably anticipated research, or resulted from work the employee performed for the employer.

  3. 3

    Delaware has no general statute voiding an overbroad NDA confidentiality clause as a restraint on someone's ability to work. Enforceability of a non-compete or restrictive covenant embedded in an NDA is decided under Court of Chancery common law, applying the three-part reasonableness test from Faw, Casson & Co. v. Cranston, 375 A.2d 463 (Del. Ch. 1977): reasonable geographic scope and duration, a legitimate economic interest, and a balance of the equities favoring enforcement.

  4. 4

    Trade secret protection runs through the Delaware Uniform Trade Secrets Act (6 Del. C. Sections 2001 through 2009), separate from whatever the NDA itself says.

  5. 5

    A trade secret misappropriation claim in Delaware generally must be filed within three years of when the misappropriation was discovered or reasonably should have been discovered, and a continuing misappropriation counts as a single claim for that purpose (6 Del. C. Section 2006).

  6. 6

    Mutual NDAs, where both sides share confidential information, and one-way NDAs, where only one side does, are both ordinary enforceable contracts in Delaware; which one fits depends on whether the exchange runs both directions, like a partnership or acquisition discussion, or one direction, like pitching an investor.

  7. 7

    A Delaware court can order injunctive relief to stop an ongoing or threatened breach of a valid NDA, in addition to any damages the disclosure caused, and the Delaware Uniform Trade Secrets Act separately authorizes exemplary damages of up to twice the compensatory award for willful and malicious misappropriation.

Key decisions before you file

Before you file a Non-Disclosure Agreement in Delaware, a few decisions shape the document: which option to choose and what each one means. The Non-Disclosure Agreement guide walks through them.

Open the Non-Disclosure Agreement guide

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DELAWARE NON-DISCLOSURE AGREEMENT

[Party A Name], with an address in [City], Delaware, and [Party B Name], with an address in [City], Delaware (together, the "Parties"), sign this Non-Disclosure Agreement below.

  1. Purpose. To allow the Parties to [describe business purpose, e.g. negotiate a proposed transaction], each may share with the other information that neither wants disclosed outside this relationship.

  2. Definition of Confidential Information. "Confidential Information" covers a trade secret as 6 Del. C. Section 2001(4) defines it, meaning information whose value comes from staying out of general knowledge and that its owner guards with reasonable efforts, plus any other business, financial, or technical material a Party labels confidential or discloses where confidentiality is obvious. Excluded is information a Party already had, later develops on its own, obtains free of any secrecy duty, or that becomes public without the receiving Party's fault.

  3. Obligations. A Party receiving Confidential Information limits its use to the purpose named in Section 1, guards it the way a careful business protects its own sensitive records, and keeps it from outsiders unless the disclosing Party first agrees in writing. It may still route the information to its own personnel or advisors on a need-to-know basis, provided each of them is separately bound to confidentiality terms no weaker than these.

  4. Scope Limitation (Delaware-Specific). Delaware has no statute like California's Section 16600 voiding contracts that restrain lawful work; instead, the Court of Chancery tests a restrictive covenant embedded in an NDA against the three-part reasonableness standard from Faw, Casson & Co. v. Cranston, 375 A.2d 463, 466 (Del. Ch. 1977): reasonable scope and duration, a legitimate business interest, and equities favoring enforcement. Because Delaware courts favor striking down an overbroad restriction over narrowing it, the Parties confine this Agreement's confidentiality definition to actual trade secrets and genuinely sensitive information, never a Party's general skill, know-how, or professional experience.

  5. Invention Assignment Carve-Out. Where this Agreement arises from an employment relationship and calls for the employee to assign inventions to the employer, 19 Del. C. Section 805 carves out anything invented entirely on the employee's own time and without the employer's equipment, supplies, facility, or trade secrets, so long as the invention neither relates to the employer's business or anticipated research nor grows out of work done for the employer. A broader assignment clause is unenforceable as a matter of Delaware public policy, and continued employment cannot be conditioned on accepting one.

  6. Federal Whistleblower Notice. The Defend Trade Secrets Act, 18 U.S.C. Section 1833(b), immunizes an individual from criminal and civil liability for sharing a trade secret, in confidence, with a government official or a lawyer to flag a suspected violation of law, and the same immunity covers a trade secret filed under seal in a lawsuit. Omitting this notice would cost the disclosing Party the Act's exemplary damages and fee-shifting remedies against an employee, so it stays in regardless of which state's law governs the rest of this Agreement.

  7. Term. The confidentiality obligations above run for [X years] from the signature date, except that information meeting Section 2's trade secret definition stays protected for as long as it keeps that status under Delaware law.

  8. Return or Destruction. When the disclosing Party requests it, or the arrangement in Section 1 ends, whichever comes first, the receiving Party returns or destroys every copy of the Confidential Information in its possession.

  9. Remedies. Beyond ordinary damages, the Trade Secrets Act lets a court double the compensatory award as exemplary damages for willful and malicious misappropriation (6 Del. C. Section 2003), and Section 2004 shifts attorney's fees to the losing side of a bad-faith or willful and malicious claim. Chancery's general equity jurisdiction under 10 Del. C. Section 341, plus the injunction Section 2002 separately authorizes, means the non-breaching Party is not limited to a damages remedy.

  10. Governing Law. Delaware law governs this Agreement. For an agreement worth at least $100,000, 6 Del. C. Section 2708 locks that choice in further: a Delaware choice-of-law clause is enforced as valid and binding even where the transaction has no other connection to Delaware, a statute the legislature enacted to give commercial parties certainty when they pick Delaware law.

  11. Miscellaneous. Signing electronically satisfies this Agreement's execution requirements under the Delaware Uniform Electronic Transactions Act, 6 Del. C. Section 12A-101 and following, and the federal ESIGN Act, 15 U.S.C. Section 7001. A court striking down any single provision leaves the rest standing. What each Party promises the other, including confidentiality itself, is sufficient consideration under ordinary Delaware contract principles.

[Party A Signature] ____________________ Date: __________ [Party B Signature] ____________________ Date: __________

Delaware Requirements for Non-Disclosure Agreement

Definition of Confidential Information (Delaware Uniform Trade Secrets Act, 6 Del. C. Section 2001)

Clearly defines what constitutes confidential information under Delaware law, including trade secrets as defined in Section 2001 of the Delaware Uniform Trade Secrets Act (6 Del. C. Sections 2001 through 2009), which requires that information derive independent economic value from not being generally known and be the subject of efforts reasonable under the circumstances to maintain its secrecy.

Time Limitations (Delaware Common Law of Contracts)

Specifies the duration of confidentiality obligations, which must be reasonable in scope under Delaware contract law. Indefinite periods for information that qualifies as a genuine trade secret may be enforceable, while other confidential information may call for a defined term.

Remedies for Breach (Delaware Uniform Trade Secrets Act, 6 Del. C. Sections 2002 through 2004)

Details available remedies under Delaware law, including injunctive relief under Section 2002, damages under Section 2003, and reasonable attorney's fees under Section 2004 for a claim of misappropriation made in bad faith or for willful and malicious misappropriation. Section 2003 also authorizes exemplary damages of up to twice the compensatory award for willful and malicious misappropriation.

Return of Materials (Delaware Common Law of Contracts)

Requires the return or destruction of confidential materials upon request or termination of the agreement, enforceable under Delaware contract law.

No License Granted (Delaware Common Law of Intellectual Property)

Clarifies that no intellectual property rights or licenses are transferred by virtue of disclosing confidential information, consistent with Delaware intellectual property law principles.

Defend Trade Secrets Act Compliance (18 U.S.C. Section 1833(b), Defend Trade Secrets Act)

Includes the required notice that an individual may not be held liable for disclosing a trade secret in confidence to a government official or attorney to report a suspected violation of law, or in a sealed court filing, as required to preserve the disclosing party's remedies under the Defend Trade Secrets Act.

Economic Espionage Act Compliance (18 U.S.C. Sections 1831 through 1839, Economic Espionage Act)

Acknowledges federal protections against economic espionage and theft of trade secrets, including criminal penalties.

Severability (Delaware Common Law of Contracts)

Ensures that if any provision is found unenforceable under Delaware law, the remainder of the agreement remains valid, consistent with Delaware's approach to contract interpretation.

Integration Clause (Delaware Common Law of Contracts)

States that the NDA constitutes the entire agreement between the parties regarding confidential information, which under Delaware law helps prevent consideration of prior negotiations or agreements.

Written Form for Extended-Term Agreements (Delaware Statute of Frauds, 6 Del. C. Section 2714)

Delaware's Statute of Frauds requires that an agreement not to be performed within one year of its making be in writing and signed by the party to be charged, or evidenced by a signed memorandum. A Non-Disclosure Agreement with a confidentiality term extending beyond one year should be executed in writing to satisfy this requirement; the statute governs the form of the original agreement, not later modifications to it.

Assignment (Delaware Common Law of Contracts)

Addresses whether rights under the NDA may be assigned to third parties, which Delaware law generally permits unless expressly prohibited or involving personal services.

Waiver (Delaware Common Law of Contracts)

Clarifies that failure to enforce any provision does not constitute waiver of future rights, consistent with Delaware contract interpretation principles.

Equitable Relief (Delaware Court of Chancery General Equity Jurisdiction, 10 Del. C. Section 341, and Delaware Uniform Trade Secrets Act, 6 Del. C. Section 2002)

The Court of Chancery has jurisdiction to hear and determine all matters and causes in equity (10 Del. C. Section 341), and the Delaware Uniform Trade Secrets Act separately authorizes an injunction against actual or threatened misappropriation (6 Del. C. Section 2002), together supporting the acknowledgment that monetary damages alone may be an inadequate remedy for breach of a Delaware NDA.

Compliance with Securities Laws (Securities Act of 1933, 15 U.S.C. Section 77a et seq.; Securities Exchange Act of 1934, 15 U.S.C. Section 78a et seq.)

Ensures the NDA does not restrict disclosures required by federal securities laws, particularly important when dealing with a potential investor.

Restrictive Covenants Reasonableness (Delaware Court of Chancery common law, Faw, Casson & Co. v. Cranston, 375 A.2d 463, 466 (Del. Ch. 1977))

Delaware has no general restrictive-covenant statute; any restrictive covenant embedded in an NDA is instead reviewed under the three-part Court of Chancery test from Faw, Casson & Co. v. Cranston: reasonable geographic scope and duration, a legitimate economic interest of the party seeking enforcement, and a balance of the equities favoring enforcement. Delaware courts have grown more skeptical of overbroad covenants and generally decline to narrow, or blue-pencil, an unreasonable one rather than reject it outright.

Electronic Signatures (Delaware Uniform Electronic Transactions Act, 6 Del. C. Section 12A-101 et seq.; Federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq.)

Acknowledges the validity of electronic signatures under both Delaware and federal law.

Counterparts (Delaware Common Law of Contracts)

Allows the NDA to be executed in multiple counterparts, each of which constitutes an original but all of which together form one agreement, recognized under Delaware contract law.

Frequently Asked Questions

A Non-Disclosure Agreement in Delaware is an ordinary contract in which one or both parties agree to keep specified information confidential. It can be mutual, where both sides share confidential information, or one-way, where only one side does. Trade secrets shared under the agreement are also separately protected by the Delaware Uniform Trade Secrets Act (6 Del. C. Sections 2001 through 2009) regardless of what the NDA itself says.

It depends on reasonableness under case law rather than a specific statute. Delaware has no general law voiding an NDA whose confidentiality definition functions as a restraint on someone's ability to work. Instead, Court of Chancery common law, applying the three-part test from Faw, Casson & Co. v. Cranston, 375 A.2d 463 (Del. Ch. 1977), asks whether the restriction is reasonable in geographic scope and duration, advances a legitimate economic interest, and survives a balancing of the equities. Delaware courts have grown more skeptical of overbroad covenants and generally will not narrow an unreasonable one rather than reject it outright.

Not a general one. The one codified exception is 6 Del. C. Section 2707, which voids a covenant not to compete between or among physicians restricting where or how long a physician may practice medicine after an employment, partnership, or corporate agreement ends, while leaving related damages provisions enforceable. That statute is limited to physician agreements and does not govern an ordinary commercial or employment NDA in Delaware.

A trade secret misappropriation claim under the Delaware Uniform Trade Secrets Act generally must be brought within three years after the misappropriation is discovered, or after it reasonably should have been discovered with reasonable diligence, and a continuing misappropriation is treated as a single claim (6 Del. C. Section 2006). A separate breach-of-contract claim over the NDA itself follows Delaware's ordinary written-contract limitations period.

No, not automatically. 19 Del. C. Section 805 excludes an invention the employee developed entirely on their own time, without using the employer's equipment, supplies, facility, or trade secret information, unless the invention relates to the employer's business or actual or demonstrably anticipated research or development, or resulted from work the employee performed for the employer. A provision in an NDA or employment agreement that tries to reach further than that is against Delaware public policy and unenforceable, and an employer cannot require it as a condition of employment or continued employment.

It depends on whether confidential information will flow in both directions or only one. A mutual NDA fits a two-way exchange, such as a merger, partnership, or joint-venture discussion where both sides disclose sensitive information. A one-way NDA fits a one-directional exchange, such as pitching a business plan to an investor who is not sharing anything confidential back. Both forms are equally enforceable in Delaware; the choice is about which structure matches the actual relationship.

No. A Delaware NDA is an ordinary contract, not a formal instrument like a will or power of attorney, so it does not require notarization or witnesses to be valid. It only needs the standard elements of a valid contract: an offer, acceptance, and consideration, along with signatures from the parties being bound.

The non-breaching party can seek injunctive relief to stop an ongoing or threatened disclosure, along with damages caused by the breach. If the disclosed information also qualifies as a trade secret, the Delaware Uniform Trade Secrets Act provides an additional, independent basis for relief, including damages for actual loss and unjust enrichment, and exemplary damages of up to twice the compensatory award if the misappropriation was willful and malicious, separate from whatever remedies the NDA itself specifies.