NDA and Non-Compete in Nigeria: How to Draft These Clauses

Confidentiality and Non-Compete Clauses in Nigeria: Drafting Enforceable Covenants

There’s a moment that happens in a lot of Nigerian businesses usually after something has gone badly wrong. A key employee leaves and joins a competitor, taking with them a client list that took years to build. A business partner walks away and sets up a nearly identical operation across the street. A contractor who was brought in for a sensitive project shares proprietary information with a third party. And the business owner, sitting across from a lawyer, asks the question that always comes too late: “Didn’t we have something in place to prevent this?”

Sometimes the answer is no there was nothing in place at all. More often, there was something, but it was so vaguely worded or so poorly structured that it wouldn’t survive ten minutes of serious legal scrutiny. A clause buried in an employment contract that says “the employee shall not disclose company information” doesn’t do very much when the employee has already left and the company information is already out there.

Confidentiality agreements and non-compete clauses are among the most misunderstood and poorly drafted legal tools in Nigerian business practice. They’re common almost every employment contract has at least one of them but the gap between having these clauses and having clauses that actually work is enormous. This article is about closing that gap.

We’ll look at what confidentiality covenants and non-compete clauses are, how Nigerian courts approach them, what makes them enforceable, and what kills them. We’ll also look at the specific drafting considerations that separate a clause a court will uphold from one it will throw out because in Nigeria, as in most common law jurisdictions, the way these clauses are worded makes all the difference.

Understanding What You’re Actually Trying to Protect

Before you can draft a covenant that works, you need to be clear about what you’re trying to protect. This sounds obvious, but it’s where most business owners and, frankly, a lot of lawyers start going wrong.

There are two distinct legal instruments at play here, and they protect different things. A confidentiality agreement (or non-disclosure agreement, often called an NDA) protects information. It restricts a party from disclosing or misusing specific information they receive in the context of a business relationship. A non-compete clause, on the other hand, restricts conduct specifically, it prevents a party from engaging in competing activities for a defined period and within a defined area after the relationship ends.

You can have one without the other. A business might need an NDA with a potential investor who is reviewing its financial projections, without needing any restriction on what that investor does professionally afterwards. A company might need a non-compete from a senior employee without the relationship involving any particularly sensitive information. In many situations, you need both and understanding the distinction between them matters because they are governed by different legal principles and have different requirements for enforceability.

Confidentiality Agreements in Nigeria: The Legal Foundation

Nigerian law recognises and enforces confidentiality obligations under several overlapping legal frameworks. Contract law is the primary one when parties agree in writing that certain information will be kept confidential, that agreement is binding as a matter of contract. Equity also plays a role, particularly through the doctrine of breach of confidence, which allows courts to intervene even without a formal written agreement when the circumstances make it clear that information was shared in confidence. And various statutory provisions including aspects of the Companies and Allied Matters Act and sector-specific regulations impose confidentiality obligations in particular contexts.

In practice, a written NDA is the most reliable foundation. It takes the confidentiality obligation out of the realm of implied duties and courts’ equitable discretion, and places it on the solid ground of express contractual agreement. The parties know exactly what they’ve agreed to, what information is covered, and what the consequences of breach are.

What a confidentiality agreement must do, to be worth anything, is define what it’s protecting. This is where vague drafting causes real damage. A clause that says “the receiving party agrees to keep all information confidential” is practically useless because it defines nothing. What information? In what form? Received from whom? Over what period?

A properly drafted confidentiality agreement identifies the type of information covered whether that’s financial data, client lists, pricing strategies, technical specifications, product formulations, business plans, or any combination of these. It distinguishes between information that is genuinely confidential and information that is already in the public domain, because courts will not protect information that anyone could obtain through ordinary means. It sets out what the receiving party can and cannot do with the information. And it specifies how long the obligation lasts a point we’ll return to.

What Makes a Confidentiality Clause Fail

There are a few ways that confidentiality clauses fail in Nigerian legal practice, and understanding them helps you avoid the same mistakes.

The most common failure is over-breadth. When a company tries to classify everything as confidential every conversation, every document, every piece of information that passes through the relationship courts become skeptical. The obligation loses its meaning when it’s applied to everything indiscriminately, and judges are understandably reluctant to enforce a clause that would, for example, prevent an employee from discussing their salary with a friend or mentioning the general nature of their work on a CV.

Courts in Nigeria, drawing on English common law principles that have been incorporated into Nigerian jurisprudence, distinguish between trade secrets (which enjoy strong protection) and general confidential information (which has more limited protection) and mere general business knowledge or skill that an employee acquires through experience (which cannot be restrained at all). A confidentiality clause that attempts to cover all three categories as though they were identical will struggle in court.

Duration is another common problem. A confidentiality obligation that lasts forever or for an indefinitely long period is difficult to enforce in practice and may face judicial scrutiny. For trade secrets, perpetual confidentiality is more defensible because the information never loses its value. For general business information, time-limited obligations of two to five years are more typical and more likely to withstand challenge.

The third failure point is the absence of defined consequences. A confidentiality agreement that says “the receiving party shall not disclose the information” but says nothing about what happens if they do is incomplete. The clause should address what remedies are available to the disclosing party including the right to seek an injunction to prevent further disclosure, and the right to claim damages for any loss caused by the breach.

Non-Compete Clauses: Walking the Tightrope

Non-compete clauses are where Nigerian law gets genuinely complicated, and where the drafting challenge is at its most demanding.

The fundamental tension in non-compete law is between two legitimate interests. On one side, a business has a genuine interest in protecting itself from the person who has worked closely with its clients, learned its strategies, and built relationships on its behalf and who might use all of that against it the moment they walk out the door. On the other side, a person has a fundamental right to work and to earn a living, and a clause that prevents them from practising their profession or working in their industry for any significant period can cause real and serious harm.

Nigerian courts, following the English common law tradition, approach non-compete clauses with considerable caution. The starting point in law is that restraints of trade are void as being contrary to public policy. They are only enforceable if the party seeking to enforce them can demonstrate that the restraint is reasonable reasonable as between the parties, and reasonable in the public interest.

This is not just a procedural hurdle. It is a substantive test that courts apply seriously. A non-compete clause that fails the reasonableness test will not be enforced, regardless of how clearly it was written or how willingly the other party signed it. You cannot contract your way around this principle.

What does “reasonable” mean in this context? Nigerian courts look at three dimensions: the scope of the restriction, the duration, and the geographic reach. All three must be reasonable, and a failure on any one of them can sink the entire clause.

Scope: Protecting a Legitimate Interest, Not Eliminating Competition

The scope of a non-compete clause must correspond to a legitimate business interest that the covenantee (the party seeking to enforce it) is entitled to protect. Nigerian courts have recognised several categories of legitimate interest: trade secrets and confidential information, trade connections (particularly relationships with customers and clients built up through the covenantor’s work), and the stability of the workforce.

What courts will not accept is a clause designed simply to eliminate competition. A software company that tries to prevent a developer from working for any technology company anywhere in Nigeria for five years after leaving is not protecting a legitimate business interest it’s trying to kneecap a competitor. Courts see through this, and they don’t enforce it.

The scope of the restriction must be tailored to the actual role the person played. A senior business development manager who spent three years building client relationships in Lagos has access to something valuable and specific those relationships. A non-compete that prevents them from approaching those clients for a defined period is arguably justifiable. The same clause applied to a junior administrative assistant who had no client contact is not.

This is why blanket non-compete clauses applied uniformly across all employees, regardless of role and seniority, are so often unenforceable. The clause must be proportionate to what the specific person actually knows and can actually use.

Duration: Long Enough to Protect, Short Enough to Be Fair

Nigerian courts have never definitively fixed a maximum duration for non-compete clauses, and the right period depends heavily on the context. But general practice and judicial attitudes suggest that durations beyond two years are increasingly difficult to defend for most employment situations, and anything beyond three years would require very strong justification.

For senior employees with deep client relationships or access to genuinely valuable trade secrets, a period of one to two years is typically defensible. For non-compete clauses in commercial agreements a business sale, for example, where the seller agrees not to compete with the business they’ve just sold longer periods are more readily accepted because the context is different. A person who has sold their business and been paid for its goodwill is in a very different position from an employee who is simply moving on.

The duration should also be tied to the specific risk. If the business concern is that a departing employee will approach former clients, the relevant question is: how long will it take for those client relationships to naturally evolve so that the competitive advantage from the relationship diminishes? Six months to a year is a reasonable answer for most industries. Five years is not.

Geography: Defining the Territory That Actually Matters

A non-compete clause must specify a geographic area within which the restriction applies, and that area must be reasonable. A Lagos-based recruitment agency that tries to prevent a consultant from working in the recruitment industry anywhere in Africa for two years is almost certainly going to fail. The geographic scope bears no relationship to the actual competitive market in which the agency operates.

The geographic scope should correspond to where the business actually operates and where the competitive harm could actually occur. A company that operates exclusively in Lagos and Port Harcourt has no legitimate interest in preventing competition in Abuja. A company with genuinely national operations has a stronger case for a national restriction, but must still tie the geographic scope to the specific role of the departing party.

In an increasingly digital business environment, geographic restrictions are becoming more complex. When clients are acquired and served online, “geography” becomes less meaningful. Courts are still working through how to apply traditional geographic principles to digital businesses, and this is an area where careful, forward-looking drafting matters more than ever.

Garden Leave as an Alternative

One alternative to a traditional non-compete clause that is gaining traction in Nigerian corporate practice is garden leave a contractual arrangement where an employee who has resigned or been terminated continues to receive their full salary during a notice period but is required to stay away from the office and refrain from working for anyone else during that time.

Garden leave clauses are generally more enforceable than non-compete clauses because the employee is being compensated during the period of restriction, which addresses one of the core objections to non-competes that they prevent someone from earning a living without compensation. If you’re paying someone their full salary to stay home for three months, the argument that the restriction is unreasonable becomes much harder to sustain.

Garden leave is particularly common in financial services and professional services firms, and it is worth considering as part of the overall package of protections in employment agreements, alongside a properly drafted non-compete.

Drafting the Clauses: Practical Principles

Bringing all of these considerations together, what does good drafting actually look like?

For a confidentiality agreement, the core principles are precision and proportionality. Define the information clearly. Carve out what is not covered information that is publicly available, information the recipient already knew before entering the agreement, information they received from a third party without restriction. Set a reasonable duration. Include the right remedies, including injunctive relief. And make sure the document is bilateral where appropriate if both parties are sharing information, both should be bound.

For a non-compete clause, the drafting must reflect the three dimensions discussed above. The scope should be limited to the specific competitive activities that threaten a legitimate business interest not “any competing business” but the specific types of activities, the specific categories of clients, or the specific services that are relevant. The duration should be the minimum necessary to protect the interest, not the maximum the other party might accept. The geographic area should correspond to where the business operates and where competitive harm is realistically possible.

Severability is also important. Where possible, draft the clause so that if one part of it is found to be unenforceable, the rest can survive. Without a severability provision, a court that finds the geographic scope too wide may strike down the entire clause rather than reducing it to an acceptable scope.

LegalDoc’s NDA template and non-compete agreement template are drafted with these principles in mind. They’re structured to reflect Nigerian legal practice, include the definitional clarity that courts expect, and are proportionate in scope and duration in a way that maximises enforceability. For straightforward employment and business relationships, they provide a solid, ready-to-use foundation that you can personalise to your specific situation.

Enforcing These Clauses When They’re Breached

Even a perfectly drafted clause only matters if you’re prepared to enforce it. Enforcement in Nigeria typically involves two remedies working in tandem.

The first is an injunction a court order requiring the defaulting party to stop the prohibited conduct. In confidentiality cases, this might mean an order preventing further disclosure of the information. In non-compete cases, it might mean an order preventing the former employee from working for a specific competitor or soliciting specific clients. Injunctions can be obtained on an urgent basis (as an interlocutory injunction) to stop the harm while the full case is being decided.

The second remedy is damages compensation for the loss caused by the breach. Quantifying damages in confidentiality and non-compete cases can be challenging because the harm is often indirect, but it’s not impossible. Loss of specific clients, loss of contracts, or the cost of investigating and managing the breach can all be recoverable.

The practical lesson is that enforcement requires acting quickly. The longer you wait after discovering a breach, the weaker your position on an injunction application, and the harder it becomes to trace the specific harm caused. If you discover that a former employee or contractor has breached their confidentiality or non-compete obligations, the conversation with a lawyer should happen immediately.

Frequently Asked Questions About Confidentiality and Non-Compete Clauses in Nigeria

Are non-compete clauses enforceable in Nigeria?

Yes, but conditionally. Nigerian courts will enforce a non-compete clause only if it is reasonable in terms of scope, duration, and geographic area and protects a legitimate business interest. A clause that is too broad, too long, or designed simply to prevent competition rather than protect a genuine interest will be struck down. Enforceability depends heavily on how the clause is drafted, which is why precision in drafting matters so much.

What is the maximum duration for a non-compete clause in Nigeria?

There is no statutory maximum. Courts assess reasonableness based on the specific circumstances. In practice, non-compete periods of six months to two years are most commonly enforced in employment contexts. Longer periods require stronger justification for example, in business sale agreements where the seller has received substantial payment for the goodwill of the business.

Can I include both a confidentiality clause and a non-compete clause in the same agreement?

Absolutely, and in many cases you should. They protect different things. The confidentiality clause protects information from being disclosed or misused. The non-compete clause restricts the other party from engaging in competing activities. Both can appear in an employment agreement, a founders’ agreement, or a standalone document. LegalDoc offers both an NDA template and a non-compete agreement template that can be used separately or as part of a broader agreement.

Does a non-compete clause need to be in writing to be enforceable?

Yes, in practice. While verbal contracts are theoretically enforceable in Nigeria, trying to enforce a verbal non-compete obligation would be exceptionally difficult. The clause needs to be in a written, signed agreement that clearly sets out the scope, duration, and geographic area of the restriction.

Can a non-compete clause prevent someone from working in their profession entirely?

Generally, no. Nigerian courts, consistent with common law principles, will not enforce a clause that effectively prevents someone from practising their profession or trade. A clause that says “the employee shall not work as a lawyer anywhere in Nigeria for five years” would almost certainly be unenforceable. The restriction must be proportionate limited to the specific competitive activities that threaten the business’s legitimate interests.

What is the difference between a non-compete and a non-solicitation clause?

A non-compete clause restricts the other party from engaging in competing business activities generally. A non-solicitation clause is narrower it prevents the other party from approaching specific clients, customers, or employees, without necessarily restricting their broader professional activities. Non-solicitation clauses are often easier to enforce because they are more targeted and less restrictive of the individual’s right to work.

Can a confidentiality agreement cover information that becomes publicly available?

No. Once information enters the public domain through means other than the receiving party’s breach, the confidentiality obligation over that specific information typically falls away. A well-drafted NDA will include an explicit carve-out for information that is or becomes publicly available, as well as for information the receiving party can demonstrate they already knew before the agreement was signed or received independently from a third party without restriction.

What happens if a court finds part of a non-compete clause unreasonable?

It depends on how the clause is drafted. Under the “blue pencil” doctrine recognised in Nigeria, a court can sever the unreasonable part of a clause and enforce the remainder, provided the remaining part makes sense on its own and doesn’t require rewriting. For example, if a clause covers three activities and only one of them is unreasonable, the court might strike out that one activity and enforce the clause for the other two. This is why including a severability provision in the agreement matters.

Should I use the same NDA for employees and external third parties like investors or contractors?

Not necessarily. The dynamics are different. An NDA with an investor is typically mutual both parties are sharing information and both are bound. An NDA with an employee is usually one-directional the employee receives confidential information as part of their role and is bound not to disclose it. An NDA with a contractor may need to address ownership of work product in addition to confidentiality. LegalDoc’s NDA template can be adapted to different relationship types, but you should tailor the specific provisions to the context.

Does signing an NDA prevent someone from reporting illegal activity?

No. Nigerian courts, like courts in most common law jurisdictions, will not enforce a confidentiality agreement to conceal illegal conduct. If the confidential information relates to criminal activity, fraud, or serious regulatory violations, public interest considerations override the contractual obligation. An NDA that explicitly attempts to prevent someone from reporting illegal conduct to the relevant authorities is likely to be unenforceable to that extent.

How do I enforce a confidentiality agreement if someone breaches it?

The first step is to document the breach clearly what information was disclosed, to whom, when, and what harm resulted or is likely to result. Then engage a lawyer promptly, because the key remedy an injunction to prevent further disclosure requires urgent action. A demand letter may resolve the matter if the breach is early-stage or inadvertent. If it doesn’t, court proceedings for an injunction and damages are the next step.

Can I add a non-compete clause to an agreement after the employment relationship has already started?

Yes, but you need to be careful about consideration. For a new covenant to be binding on an existing employee, there must be fresh consideration something of value given to the employee in exchange for the new restriction. Simply asking an existing employee to sign a new non-compete without offering anything in return may not create a binding obligation. A salary increase, a promotion, a bonus, or some other benefit provided at the time of signing can satisfy the consideration requirement.

Getting These Covenants Right

Confidentiality and non-compete clauses are not just legal formalities. They are the mechanisms by which businesses protect what they’ve worked to build the client relationships, the proprietary information, the competitive edge that comes from investment and effort over time.

But they only work when they’re drafted properly. A vague confidentiality clause leaves everything open to dispute. An overreaching non-compete gets thrown out of court. And a business that has neither or has both in a form that can’t be enforced is left with nothing when the person who walked out the door starts using what they knew against it.

The starting point is having the right documents in place before the relationship begins, not after something has gone wrong. LegalDoc’s NDA template and non-compete agreement template give you professionally drafted, Nigerian-law-compliant covenants that you can personalise to your specific situation in minutes. For employment agreements, service contracts, founder arrangements, and investor discussions, these documents provide the foundation that every serious business relationship should be built on.