Legal Question in Business Law in California
Confidentiality Agreements
I am one of 5 board members for a non profit organization that, for lack of finances at the moment, has not yet obtained its business license. Between the 5 of us we reside in California, Tennesse, and Florida.
We all signed confidentiality agreements. However, someone outside the organization said that since we don't have the business license for the organization that the agreement everyone signed is pretty much worthless. Is that true or will it still be binding in a court of law?
1 Answer from Attorneys
Re: Confidentiality Agreements
It's hard to see why lack of a business license would have any impact on the validity and enforcement of a confidentiality agreement between five individuals who are in the process of forming a non-profit organization.
Perhaps the person who is advising you meant to say that an agreement by or between the founders of an as-yet-nonexistent business entity usually isn't binding on the entity when it is formed. (Even this rule has some exceptions, e.g., the business may become liable on the agreement by express ratification, or by accepting the benefits of the agreement).
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