For companies all over the world, non-disclosure agreements (or NDAs) are important tools that help protect private and sensitive information. But NDAs aren't legal (or enforceable) everywhere. So before you hire employees in Brazil, you'll want to know whether your non-disclosure clause has any teeth.
So can you have new hires sign an NDA in Brazil? What does it need to include? And how can it protect you—and your global employees? Read on to learn about NDAs in Brazil (note: our guide is for informational purposes, and isn’t intended to provide legal advice).
What is an NDA?
A non-disclosure agreement (NDA) is a legal agreement between two or more parties that outlines confidential information that should not be shared with others. The purpose of an NDA is to protect sensitive or proprietary information from being disclosed to competitors, third parties, or the public.
NDAs are commonly used in a variety of contexts, such as in business transactions, employment agreements, and research and development collaborations.
Are NDAs enforceable in Brazil?
The short answer is yes—NDAs are common in Brazil and are generally considered to be enforceable as long as they meet a few requirements:
- They must comply with Brazilian contract law.
- When breached, the aggrieved party must be able to prove damages.
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Three things you need to know about NDAs in Brazil
1. There are different types of NDAs
In Brazil, two types of NDAs are common in business relationships:
- Mutual NDAs, also known as bilateral or two-way NDAs, is a legal agreement between two or more parties where each party agrees to keep confidential information disclosed by the other party confidential. In a mutual NDA, both parties are sharing confidential information and both parties are agreeing to protect the other party's information. Mutual NDAs are often used in situations where two parties are exploring the possibility of a business relationship, such as a joint venture or partnership.
- Non-mutual NDAs, also known as unilateral NDAs, work one way, where one party discloses confidential information to the other party, and the recipient of the information agrees to keep the information confidential. The recipient is not required to disclose any confidential information of their own. Non-mutual NDAs are often used in employment relationships—situations where one party, such as a company or individual, needs to disclose confidential information to another party, such as an employee or contractor, in order to carry out a specific task or project.
2. NDAs need to be as specific as possible
In Brazil, there are no specific laws that address NDAs and what they need to include—they're governed by contract law and the civil code. With that in mind, you want an NDA in Brazil to be as specific as possible in case a dispute arises. It should include:
- Clear indication of the parties involved and their representatives. The NDA should include the names and roles of anyone who will be sharing and receiving sensitive information (i.e. the disclosing party and the receiving party), as well as any representatives who may also receive or share such information (attorneys, accountants, auditors, co-workers, etc.).
- Definition of confidential information. The NDA needs to also include the general topic of information it applies to, as well as the scope. In Brazil, NDAs typically limit disclosure of protected information to specific business purposes (for example, an employment contract), so that should also be clearly defined.
- Exclusions from confidentiality. If there are any circumstances under which the receiving party may disclose information covered by the NDA (for example, after it's become public knowledge), those should be specified in the contract.
- Terms of the agreement. The NDA should include a clause that specifically states how long it lasts—for employment NDAs, this will typically be for the duration of the working relationship. This clause should include instructions for the receiving party to return or destroy any confidential materials at the end of the NDA's term.
- What will happen if the NDA is breached. Since Brazilian law doesn't specifically cover NDAs, your contract should include a clause that specifies what happens if the NDA is breached: from indemnification to injunctive relief or arbitration proceedings.
- Personal data protection. NDAs in Brazil should contain a clause stating that any personal data disclosed under the agreement will be subject to the Brazilian General Personal Data Protection Act (LGPD).
- Jurisdiction. NDAs in Brazil should include a jurisdiction clause, which specifies which state's laws govern the agreement. The applicable law applies to any dispute resolution about the NDA, and if the parties have any trials or hearings related to the NDA, they'll take place in the state named in the jurisdiction clause.
3. In Brazil, aggrieved parties must prove damages if an NDA is breached
In case law, Brazilian courts have required parties who are seeking indemnification due to a breach of an NDA to prove any damages they suffered. This can include direct damages, actual damage to property, or indirect damages, which can mean the loss of profits they expected to earn.
When would an employee or contractor sign an NDA?
NDAs between employers and employees or contractors are often signed during a new hire's onboarding or when they start a new work contract. When hiring employees in Brazil, you can include a confidentiality clause in their offer letter or employment contract.
Frequently asked questions about NDAs in Brazil
Are NDAs enforceable in Brazil?
An NDA is a legally binding contract in Brazil. As long as it meets the legal requirements above (and doesn't violate Brazilian contract law), it's likely to be enforceable.
Are NDAs enforceable overseas?
The enforceability of an NDA from Brazil in other countries depends on a number of factors, including the specific terms of the NDA, the laws of the country in which enforcement is sought, and any applicable international treaties or agreements.
In general, the enforceability of an NDA in another country will depend on whether the terms of the NDA comply with the governing laws of that country. Some countries may have stricter requirements for the enforceability of NDAs, such as requiring that the NDA be in writing, signed by all parties, and include specific provisions.
Additionally, some countries may not recognize or enforce foreign judgments or legal agreements, which could make it more difficult to enforce an NDA from Brazil in those countries.
If the parties to an NDA anticipate that enforcement may be required in other countries, they may wish to include provisions in the agreement that address the issue of cross-border enforcement. For example, they may choose to include a choice of law provision that specifies the governing law of the NDA or include foreign courts in the jurisdiction clause.
What information can be covered by an NDA?
Due to Brazil's lack of specific laws pertaining to NDAs, the information that can be included in one isn't limited. But best practices say that NDAs should be limited to proprietary information, including:
- Trade secrets
- Financial information
- Customer information
- Employee information
- Intellectual property
Note that personal data is governed by data privacy laws in Brazil, and any information shared under a non-disclosure agreement needs to comply with the LGPD.
Some information is broadly considered outside the scope of an NDA, including information disclosed at the request of a government authority or by court order, information related to national security, information that is already part of the public domain, and information that is developed independently by any party in the NDA.
When should you use an NDA?
NDAs are common in Brazil when a company is hiring an employee or contractor. Some other potential situations when an NDA may make sense include:
- When presenting an invention or business idea to a potential partner or investor
- When sharing financial information with a potential partner or investor
- When showing a new product or technology to a potential buyer
- When sharing sensitive or proprietary company information with an employee or contractor
- When sharing customer information with an employee or contractor
Is an NDA the same as a confidentiality agreement?
Yes. Non-disclosure agreements may also be called confidentiality agreements (CAs), confidential disclosure agreements (CDAs), proprietary information agreements (PIAs), or secrecy agreements (SAs).
Is an NDA the same as a non-compete agreement?
No, a non-disclosure agreement (NDA) and a non-compete agreement are not the same thing in Brazil, although they may sometimes be used in conjunction with each other.
An NDA is a legal agreement between two or more parties that outlines confidential information that should not be shared with others. The purpose of an NDA is to protect sensitive or proprietary information from being disclosed to competitors, third parties, or the public.
On the other hand, a non-compete or non-solicitation agreement is a legal agreement between an employer and an employee, where the employee agrees not to compete with the employer for a certain period of time after leaving the company. The purpose of a non-compete agreement is to protect the employer's business interests by preventing the employee from working for a competitor or starting a competing business for a certain period of time.
In Brazil, non-compete agreements are subject to specific legal requirements, and they must be in writing and limited in duration and geographic scope in order to be enforceable. Additionally, non-compete agreements must provide for compensation to the employee during the contractual period.
While an NDA and a non-compete clause are separate legal instruments with distinct purposes, they may sometimes be used together in order to provide more comprehensive protection for a company's confidential information and business interests.
Is an NDA ethical?
Whether or not a non-disclosure agreement (NDA) is ethical depends on the specific circumstances in which it is used and the intentions of the parties involved.
In general, NDAs can be an important tool for protecting sensitive or confidential information, such as trade secrets, intellectual property, or business strategies. By specifying non-disclosure obligations, NDAs can help businesses safeguard their competitive advantage, maintain client trust, and ensure that sensitive information remains confidential.
However, there may be situations where an NDA could be used unethically, such as when it is used to silence whistleblowers or to prevent individuals from speaking out about wrongdoing or illegal activities. In such cases, the confidentiality agreement could be seen as an attempt to cover up wrongdoing or to protect the interests of those who are engaged in illegal or unethical activities.
Benefits of NDAs in Brazil
NDAs can provide several benefits to businesses and individuals in Brazil, including:
- Protecting confidential information. NDAs can be used to protect sensitive or confidential information, such as trade secrets, customer data, or proprietary information, from being disclosed to unauthorized parties. This can help businesses safeguard their competitive advantage and maintain their reputation.
- Promoting innovation. By protecting intellectual property and confidential business information, NDAs can encourage innovation and creativity by giving companies the confidence to invest in research and development without fear of their ideas being stolen or copied.
- Enhancing collaboration. NDAs can facilitate collaboration between parties, such as when companies partner to develop new products or services, by ensuring that each party's confidential information is protected and that the parties can share information freely without fear of it being misused or disclosed.
- Mitigating legal risks. NDAs can help to mitigate legal risks by setting clear expectations for the protection of confidential information and outlining the consequences of breach. This can help to deter individuals from disclosing confidential information and give businesses legal recourse if confidential information is improperly disclosed.
- Maintaining client trust. By protecting confidential client information, NDAs can help to maintain client trust and loyalty by demonstrating a commitment to confidentiality and professionalism.
What happens if an NDA is breached?
The penalties for breaching an NDA can vary depending on the severity of the breach, the penalties that are outlined in the NDA, the laws in the jurisdiction that oversees the NDA in Brazil, and whether any damage was done. An NDA is a legally binding contract, so any breach means legal action can be taken against the violating party.
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Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.