Anaheim, CA asked in Business Law and Contracts for California

Q: Is it possible to create an NDA and supplier agreement with an international supplier that is enforceable in the US?

One of my major vendors based in Asia is asking for customer information and invoices in order to keep giving me Distribution price.

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2 Lawyer Answers
Maurice Mandel II
Maurice Mandel II
Answered
  • Newport Beach, CA
  • Licensed in California

A: Yes, of course, a contract formation attorney can draft you such an agreement. IMO the real question is why do they want your customer information and invoices? And a probable answer is that they want to go around you and deal direct with your clients. Steal your clients from you. And once that happens, you have a real problem on your hands in litigating against them and in collecting on a judgment that you might receive.

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Nathan Wirtschafter
Nathan Wirtschafter
PREMIUM
Answered
  • Encino, CA
  • Licensed in California

A: A breach of an NDA can lead to litigation. In Five Star Gourmet Foods, Inc. v. Fresh Express, Inc. 2020 WL 513287, Five Star sued Fresh Express for fraud, misappropriation of trade secrets, unfair competition and other claims based, in part, on alleged breaches of various NDA's. Five Star claimed Defendants obtained confidential information by breaching the various NDA's. Then, Defendants used Plaintiff's confidential information to steal trade secrets and customers. The federal court largely allowed the suit to proceed, striking only a few portions of the case at the pleading stage.

I very much agree with Mr. Mandell's warning about disclosing customers names and information.

If necessary, you might provide the information in generic form. For example, "Customer 123 generates $100,000 per year in sales, and is an average of 50 days past due." The bottom line is that information is power, and you have risked a lot to get bona fide marketplace information. I'd be careful about disclosing an asset without something serious in return.

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