Breach: If an NDA is breached, the breaching party – meaning the party that revealed confidential information — could be sued for damages, be forced to pay lost profits, and in some cases, be held in contempt of court. However, a good NDA should have a way to avoid drawn out litigation by providing for the ability to obtain an injunction to stop any further disclosure of confidential information, and a liquidated damages provision. A provision for liquidated damages provides incentive for the receiving party to stay true to its obligations, a specific monetary penalty against the breaching party and a way to avoid complex lawsuit questions like the amount of damages. However, the liquidated damages provision cannot be out of proportion to the information being shared or the effect of the breach on your business.