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CMA Foundation · Fundamentals of Business Laws and Business Communication · Legal Aspects of Business Communication

An employee of Mehta Traders signs a non-disclosure agreement (NDA) with the firm. Under general contract law principles, which statement is correct?

An NDA can be enforced as a contract if it satisfies the essentials of a valid contract, including free consent and lawful consideration and object. It need not be registered with the Registrar of Companies, and it binds the employee who signed it.

  1. AIt is unenforceable because it restricts speech
  2. BIt is valid only if registered with the Registrar of Companies
  3. CIt can be enforced as a contract if it meets the essentials of a valid contract, such as lawful consideration and objectCorrect
  4. DIt binds only the employer, not the employee

Explanation

An NDA is a contract and is enforceable when the essentials such as free consent, lawful consideration and lawful object are present. No registration with the Registrar of Companies is required, and it binds the party who signed it.

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