Is an NDA enforceable in Canada?
Written by For Founders Law, a Toronto firm licensed by the Law Society of Ontario. About us
Short answer
Generally yes. An NDA is an ordinary contract, and Canadian courts enforce confidentiality obligations that are clear and protect information that is actually confidential. Enforcement gets harder when the definition of confidential information is so broad it covers public information, when the NDA hides a non-compete or non-solicit, or when there's no evidence of what was disclosed. Remedies can include an injunction and damages.
An NDA is only as useful as what you can prove and what a court will enforce. Most well-drafted business NDAs hold up. Many free templates contain the clauses that don’t.
What makes an NDA enforceable?
The usual contract requirements, plus a few specific to confidentiality:
| Requirement | Why it matters |
|---|---|
| A real agreement | Signed (electronically is fine), with consideration such as the mutual exchange of information or a deal discussion. See electronic signatures in Ontario |
| A clear definition | Courts are wary of definitions so broad that they cover anything ever said |
| Standard exclusions | Information already public, already known, independently developed, or received from someone else lawfully |
| Information that is actually confidential | If you shared it publicly, an NDA won’t make it secret again |
| Evidence | Records of what you disclosed, when and to whom |
Which clauses cause trouble?
- Hidden non-competes. Ontario’s Employment Standards Act prohibits non-compete agreements with employees, including ones inside an NDA, with narrow exceptions for executives and for the sale of a business (s. 67.2). Restrictive covenants with businesses are judged by the common law test of reasonableness. See Ontario’s non-compete ban.
- Broad non-solicits. Allowed in principle, but they must be reasonable in scope and length. See non-solicit.
- Perpetual terms for ordinary information. Common for trade secrets, harder to justify for general business information.
- Residuals clauses in the other side’s form, which let them use what their staff remember.
- Penalty amounts. A fixed payment that isn’t a genuine pre-estimate of loss may not be enforced as written.
What can I get if someone breaches it?
Usually an injunction to stop further use or disclosure, which matters more than money for confidential information, and damages for losses you can prove. Some cases also support an accounting of profits. Courts expect you to move quickly once you learn of a breach. Even without an NDA, the common law of breach of confidence may help, and the Criminal Code (s. 391) makes it an offence to knowingly obtain, communicate or make available a trade secret by deceit, falsehood or other fraudulent means. See how to protect trade secrets.
Does an NDA protect my idea?
Only the specific information you disclose to that party. It doesn’t stop independent development and doesn’t give you ownership of anything. Most venture investors won’t sign one for a first pitch. See do I need an NDA before a demo or investor pitch.
How long should it last?
Commonly two to five years for general business information, and longer, sometimes indefinitely, for trade secrets and source code, as long as they stay secret. The right length depends on how long the information stays valuable.
What to do next
We prepare NDAs and review the other side’s form as a contract review, at fixed fees on our fees page.
This guide is general information about Ontario and Canadian law, not legal advice for your situation. If you think an NDA has been breached, book a free 15-minute consult.