The Legal Basis of an NDA and Freedom of Contract
A non-disclosure agreement (NDA) does not appear as a separately named contract in the Civil Code of Georgia — its entire strength rests on the principle of freedom of contract. Private law subjects may, within the limits of the law, freely conclude contracts and determine their content; they may also conclude contracts that are not provided for by law, provided they do not contradict it (Article 319, part 1). The obligation not to disclose information is built precisely on this norm: the parties themselves create the rules by which exchanged information is protected.
This freedom is not absolute: where one party holds a dominant position in the market, it bears the obligation to conclude contracts in that field and may not groundlessly offer a counterparty unequal terms; nor may a refusal to contract be declared to a person acquiring property or services for non-entrepreneurial purposes without justification (Article 319, parts 2 and 3). These boundaries become real in NDA practice whenever the negotiating partner is a powerful market player — and a well-drafted agreement anticipates them.
The Obligation to Provide Information and Its Limits
An obligation may imply the right to receive particular information: the provision of information must be secured where it matters for determining the content of the obligation and the counterparty can provide it without violating its own right, while the costs of providing the information must be reimbursed by the recipient (Article 318). In NDA practice this norm works in two directions: it reflects the connection between information and the content of the obligation, and it frames the scope of cooperation — what information is subject to a right of receipt and what remains purely a matter of the parties' agreement.
A well-drafted NDA precisely defines what constitutes protected information, to whom it may be transmitted (for example, advisers and consultants), for which purposes it may be used, and what happens after the cooperation ends. Where these elements are missing, disputes often reach the preliminary question of whether the information was confidential at all.
Compensation of Damage upon Disclosure
Upon breach of an NDA, only such damage is subject to compensation as was foreseeable to the debtor in advance and constitutes a direct consequence of the damaging act (Article 412). These two filters — foreseeability and direct consequence — define the realistically recoverable damage, and this is why they should be reflected in the text of the agreement: where a party could anticipate a particular type of loss in advance, its claim is considerably better protected.
Practical experience shows that proving damage is the most difficult stage in disclosure cases: it is often unknown who used the information and how. Contracts therefore frequently fix a conventional amount of damages or a mechanism for establishing the loss — such terms, too, arise within the freedom of contract and serve the balance of the parties' interests.
Practical Stages of Drafting an NDA
The first stage is the inventory of protected information: technological, financial, client, partner or other data connected with the cooperation. The second is the definition of exceptions — information that becomes publicly available without the recipient's fault, was lawfully known before, or is independently developed. The third stage is the rule on duration and subsequent fate: for how long the information remains protected and what happens to its physical or electronic repositories when the cooperation ends.
The fourth stage is liability and dispute resolution. In international deals the choice of governing law and forum is likewise settled — the Georgian principle of freedom of contract gives the parties this choice. An agreement that passes through all four stages with legal discipline protects both sides of the exchange.
Frequently Asked Questions
Is an NDA a lawful contract in Georgia?
Yes. Parties may conclude contracts not provided for by law provided they do not contradict it (Article 319, part 1). An NDA is precisely such an agreement built on freedom of contract.
What damage is compensable upon disclosure?
Only damage that was foreseeable to the debtor in advance and is a direct consequence of the act (Article 412). This is why the types of loss should be fixed in the contract beforehand.
What must an NDA contain?
A definition of protected information, exceptions, permitted purposes, the circle of access, duration and the liability rule. Each element separately reduces the risk of a dispute.
What limits exist facing a dominant partner?
A party in a dominant market position may not groundlessly offer unequal terms (Article 319, part 2) — a boundary the other side can invoke in negotiations.
How We Help on Legal.ge
The Legal.ge team drafts and audits non-disclosure agreements for transactions of every type — from startup negotiations to corporate acquisitions: the correct definition of protected information, a balanced set of exceptions, a mechanism for establishing damage, and a dispute resolution clause. We also assess the risks of existing NDAs and assist in post-disclosure disputes. Contact us — we will prepare an agreement suited to your situation.