Confidential Agreements, But What About Results?

You thought you had a watertight confidentiality agreement, but what if your business partner does not comply? How do you handle the damage this might cause?

What Happened?

In this case, an entrepreneur decided that confidential information about his business was no longer in safe hands. During a short session, a settlement was reached that included a confidentiality obligation and a fine of €100,000 per breach. Eventually, it turned out that the partner violated these agreements in multiple ways.

What Did the Court Decide — and Why Is It Noteworthy?

The Supreme Court ruled that the imposed penalty order was unenforceable because the amount could not be objectively determined. The court stated that a settlement protocol only has enforceable power if the claims are sufficiently described. In this case, there was no clear way to determine whether someone adhered to the confidentiality obligation or not. This is noteworthy as it raises the question of whether you can claim a penalty after a settlement without hard, objective evidence of breaches.

What Does This Mean for You as an Entrepreneur?

• Clear Agreements: Ensure that your confidentiality agreements and settlements are clearly drafted. Always specify how to verify compliance or breach.
• Collect Evidence: Keep documentation that can confirm adherence to or breaches of confidentiality obligations.
• Legal Steps: Be cautious when involving the judiciary without solid evidence. There's a good chance your claims will be inadmissible, which could waste your time and money.
• Consider Mediation: Sometimes more can be achieved at the negotiation table than in court. Mediation can help reach a revision of agreements that better fit both parties.

What Should You Do Now?

Review all your existing agreements and ensure you can always demonstrate that someone respects the agreements. If not, consider legal actions, but a structured approach might yield more profit than just relying on legal penalties.

Final Thought

Avoid the consequences of a breach by being well-prepared. Document everything as clearly as possible because if things go wrong, you do not want to be caught up in ambiguity that can cost you a lot of money and recovery options.

Case Reference

This post is based on ECLI:NL:HR:2025:1807.

Case Reference

This post is based on ECLI:NL:HR:2025:1807.

Do you have a legal question following this ruling?

Mr. Vincent Besters is a specialised business lawyer in Amsterdam with over 16 years of experience. Feel free to get in touch for an initial consultation.

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