Q & A Business Legal Corner

By Beatrice Moyo

1. Are non-disclosure agreements really effective?

A non-disclosure agreement is a contract which establishes a confidential relationship between parties to that agreement. It is legally binding just like any other form of contract. The parties by signing a non-disclosure agreement, they become legally obliged to observe confidentiality. For the NDA to be valid and enforceable, it should be made up of the following characteristics:

• It must define the parties to the agreement.

The NDA must clearly describe and define the parties to that agreement so that no question is posed pertaining to whom the agreement bounds

• It must state the information subject to non-disclosure

The non-disclosure agreement becomes vague and confusing by not clearly stating what it aims to protect. One must not infer what the agreement aims to keep in confidentiality, this destroys the whole concept of the ‘non-disclosure agreement’

• It must also state and define third parties to whom confidential information shall not be shared.

This gives a party a sphere within which he or she may disclose the information intended to be kept in confidence.

• Duration of the agreement must also be stated.

By so doing, a party knows extent of the duty of confidence. For instance, the duty of confidence may still bind the party even after termination of such any agreement.

 A non-disclosure agreement is however limited by law in that it cannot protect information that is readily known to the public and information that is required by law to be disclosed to the third party.

In conclusion, a non-disclosure agreement is really effective as it is legally binding and enforceable in the Zimbabwean courts.

• What can be done if one party discloses confidential information?

Non-disclosure agreements are legally binding in Zimbabwe. Disclosing information protected by a non-disclosure agreement amounts to breach of contract. The party that discloses confidential information would have failed to honour its contractual obligation.

Therefore, where one party breaches the non-disclosure clause, the other party can seek relief from the court. The aggrieved party can obtain an interdict to stop the breaching party from continuing to violate the non-disclosure clause. The aggrieved party may also sue for breach of contract and claim damages suffered as a result of the disclosure by the breaching party.The party needs to merely show that the other party indeed breached its contractual obligations by disclosing the confidential information as provided for by the non-disclosure agreement. The damages will be quantified in relation to the loss suffered by the aggrieved party and the aggrieved party will need to produce evidence to prove the loss suffered.

• As a start-up or SME should l really worry about trademarks?

The law which governs trade marks in Zimbabwe is the Trade Marks Act [Chapter 26:04]. The Act does not oblige a Small – Medium Enterprises to have trade marks in order to access its trade rights.

However, trademarks functions to distinguish a product or service of one enterprise from another enterprise. Trade marks protects the interests of   an enterprise from potential theft of brand name, design and so forth. Hence although not mandatory, it is encouraged that a small medium enterprise registers for trademark in order to allow undisturbed growth.

• What are the basic things to be included in a contract of employment?

A contract of employment follows the rules of the Law of                Contract. It must be legal, there must be serious intention of the parties, contractual capacity, possible of performance and there must be consensus of the parties. A contract of employment in Zimbabwe is governed by the Labour Act [Chapter 28:01]. There are three basic things which makes a contract of employment sound. These are:

• Agreement to make personal services available
• Remuneration
• Subordination.

1. Agreement to make personal services available

By signing the employment contract, the employee becomes bound to provide services rendered by the employer. The employee is placed under an obligation to offer services rendered

1. Remuneration

Remuneration forms the basis of the employment contract. The employer is seeking services at the same time, the employee is seeking wages. The employer is bound to remunerate, the services given by the employee

1. Subordination

The notion of subordination has a wide ambit but at its core lies some element of control by the employer. The employer must be able to exercise control on the employee. The control should be however minimum.

• What aspects are not supposed to be ignored when drafting an investors agreement in Zimbabwe?

The law which governs investments in Zimbabwe is the Zimbabwe Investments and Development Agency Act [Chapter 14:37]. The act is however silent on basic requirements of an investor’s agreement. The basic aspects that must be stated in an investor’s agreement are however drawn from basic principles of the Law of contract. The basic aspects include:

• Investors rights

The agreement must specify what the investor is entitled to in the running of the company. These rights should be clearly stated and their scope must be defined

• Investors duties

The agreement must outline, the obligations placed on the investor. Consequence of neglecting such duties must also be enshrined in the agreement.

• Participation rights

The investors participation rights must be provided for in the investors agreement. Extent and limitations of such rights must be clearly defined.

• Dispute settlement clause

Section 38 of ZIDA caters for disputes resolution. The disputes pertaining to investors agreements are to be dealt in accordance with Zimbabwean laws. Parties may choose their preferred method for dispute resolution

• Confidentiality clause

For investment purposes, the investor is exposed to the company’s confidential information. It is imperative to insert a clause that guards against disclosure of such confidential information to third parties.

• Compensation for loss clause

This clause inspires confidence in the investor as he or she is assured that in the event of loss, he or she is compensated.      

Disclaimer:

The information and opinions expressed above are for general information only. They are not intended to constitute legal or other professional advice. For clarification, assistance, or if you have questions, contact Beatrice Moyo, a lawyer practicing in Harare, Zimbabwe on beatricejoycemoyo@gmail.com.