If abusiness closes, are non-disclosure agreements void?

UPDATED: Feb 15, 2011

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If abusiness closes, are non-disclosure agreements void?

I have a non-disclosure agreement with my employees in my restaurant/catering service. Upon closure of the restaurant, is this agreement still valid? The restaurant is closed but we are trying to sell the business. I have a competitor who has hired a former employee for her knowledge. If he can get this information for free, doesn’t this devalue the company I am trying to sell?

Asked on February 15, 2011 under Employment Labor Law, Texas


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Well, first one needs to read the agreement in question.  That is without a doubt.  But Texas has a pretty strong non-disclosure law from what I understand and even if an individual does not sign a non-disclosure agreement, Texas employees are under a common law duty not to disclose an employer's confidential business information or trade secrets. The fact that the restaurant itself has closed does not  necessarily mean that the secrets of running the restaurant are available for all now.  You are protecting a business plan, correct, and not the restaurant itself. I would speak with an attorney about reading it and Texas law as well as sending a letter to all former employees regarding the non-disclosure that they signed.  Good luck to you.  

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