NDA Agreements: Your Shield for Protecting Trade Secrets Under Macedonian Law

In today’s dynamic and competitive business environment, information is one of the most valuable currencies. Innovative ideas, business plans, financial data, client lists, and technological processes form the foundation of every successful company. Protecting this sensitive information from unauthorized disclosure or misuse is essential for maintaining a competitive advantage. This is where Confidentiality or Non-Disclosure Agreements, commonly known as NDAs, come into play.

Although the term “NDA” is not explicitly defined as a separate type of contract in Macedonian legislation, the legal framework for its existence and application is firmly grounded in several laws, primarily the Law on Obligational Relations and the Law on Trade Companies. These agreements are a powerful tool for establishing a legally binding obligation to protect confidential information.

Legal Basis for Confidentiality Agreements (NDAs) in the Republic of North Macedonia

The foundation for entering into NDA agreements stems from the principle of freedom of contracting, according to which parties are free to regulate their obligational relations as long as this is in accordance with the Constitution, laws, and good practices.

In addition to this general principle, there are specific legal provisions that directly or indirectly emphasize the obligation to preserve business secrets and confidential information:

1. Protection of information during negotiations: Even before a main contract is concluded, the parties often exchange sensitive data. The Law on Obligational Relations clearly stipulates that if one party provides confidential information to the other during negotiations, the receiving party must not make this information available to third parties nor use it for its own benefit, regardless of whether the contract is eventually concluded or not. This provision itself represents legal protection, but entering into a formal NDA before the start of negotiations further strengthens and clarifies the obligations and consequences.

2. Statutory obligation for managers and members of management bodies: The Law on Trade Companies imposes a direct obligation on persons who manage a company to safeguard business secrets. According to the law, the manager must conduct the company’s affairs with the diligence of an orderly and conscientious trader and must protect the company’s business secrets. A similar obligation applies to members of the management and supervisory boards in joint-stock companies, emphasizing that the duty to preserve business secrets continues even after their mandate ends.

3. Confidentiality obligations in specific types of contracts: The Law on Obligational Relations also prescribes confidentiality obligations in certain types of agreements. For example, a license agreement for an unpatented invention or secret technical know-how requires the licensee to keep the subject of the license confidential. Additionally, the Law on Obligational Relations obliges a commercial agent to preserve the business secrets of their principal and holds them liable for damages if they use or disclose such information—even after the contract has ended.

   
   

Key Elements of an NDA Agreement

For an NDA agreement to be effective and enforceable, it must contain several essential elements:

• Definition of confidential information: This is the core of the agreement. It must clearly and precisely specify what is considered confidential information. This may include, but is not limited to: financial reports, business strategies, marketing plans, client and supplier lists, technical data, prototypes, software code, formulas, and any other information that is not publicly available and has commercial value.

• Identification of the parties: The agreement must clearly state which party is disclosing the information (the Discloser) and which party is receiving it (the Recipient).

• Obligations of the Recipient: The duties of the party receiving the information are described in detail. They typically include:

  • Using the information exclusively for the agreed purpose (e.g., evaluating a potential collaboration).

  • Not disclosing the information to third parties without the prior written consent of the Discloser.

  • Taking reasonable measures to protect the confidentiality of the information.

  Confidentiality exceptions: Every good NDA outlines the situations in which the confidentiality obligation does not apply. These usually include information that:

  • Was already publicly known at the time of disclosure.

  • Became publicly known after disclosure, but not due to the Recipient’s fault.

  • Was legally obtained by the Recipient from a third party who had no confidentiality obligation.

  • Must be disclosed by the Recipient based on a law or court order.

    
    

• Duration of the obligation: The agreement defines the period during which the confidentiality obligation remains in effect. This period may be fixed (e.g., 3, 5, or 10 years) or may last as long as the information retains its nature as a trade secret.

• Consequences of breach: In case of a violation, the Discloser has the right to legal protection. This includes:

  • Compensation for damages: Under the general rules of liability for damages, the party who causes damage through fault is obliged to compensate it. The injured party may claim compensation for actual damage as well as lost profit.

  • Contractual penalty: To avoid the complex process of proving the amount of damage suffered, the parties may predefine a monetary amount that the breaching party must pay in the event of a violation. The Law on Obligational Relations regulates this matter, allowing the creditor to claim the contractual penalty even if no damage has occurred, and if greater damage has occurred, the creditor may claim the difference up to full compensation.

    
    

When Should an NDA Be Used?

The practical application of NDA agreements is broad and covers numerous business situations:

• Employment: When new employees or external collaborators gain access to the company’s sensitive data.

• Business negotiations: During discussions about potential partnerships, mergers, acquisitions, or investments.

• Product development: When hiring programmers, designers, or engineers to develop a new product or service.

• Presenting ideas: When presenting an innovative idea to potential investors or business partners.

• Licensing: In agreements for licensing technology, software, or other intellectual property rights.

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Conclusion

A Non-Disclosure Agreement (NDA) is an essential legal tool for protecting a company’s intellectual capital and trade secrets. Its legal foundation is solid and arises from the core principles of obligational law and the specific obligations prescribed in the Law on Trade Companies.

A properly drafted NDA provides a clear framework for identifying which information is confidential, how it should be handled, and what the consequences are if the obligations are breached. It is not only a reactive tool for claiming damages but, above all, a preventive mechanism that deters parties from misusing confidential information. In a world where information is power, protecting it through a well-structured NDA is a smart and necessary business decision.

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Note: This text has been prepared solely for informational purposes and cannot be considered legal advice or guidance for specific actions. Legal matters are complex, and each case has its own unique circumstances that must be assessed individually. For this reason, it is recommended to consult a qualified attorney who can provide tailored legal solutions to your specific situation.