contract-law corporate-law
When can an NDA be legally broken?
<p>This question is purely theoretical, <strong>I promise.</strong></p>

<p>Let's say a person signed a Non-Disclosure agreement under certain terms, and then, somehow, they witnessed an illegal act but were forbidden to report it to the police by the agreement. If they reported the act, could the other party of the NDA take legal action?</p>

<p>The general question is, when, if ever, is a person legally protected to reveal information directly violating an NDA?</p>

<p>There are many reasons that a contract can be void or voidable. <a href="https://en.wikipedia.org/wiki/Void_contract">Wikipedia</a> will give you a good rundown. The reasons which apply to contracts generally will apply to NDAs specifically. This answer focuses on non-disclosure agreements.</p>

<p>Various legal authorities and courts have found contracts to be void in the following circumstances:<br>
1. Crime<br>
2. Torts<br>
3. Public safety<br>
4. Public Health<br>
5. Matters of substantial public concern</p>

<p>The <strong>Model Penal Code</strong> prohibits what it calls compounding. The crime involves accepting payment in exchange for not reporting a crime.</p>

<blockquote>
  <p><a href="http://www.dubberkelman.com/restricted/student_cd/web/MPC/mpc.html">Section 242.5. Compounding</a></p>
  
  <p>A person commits a misdemeanor if he
  accepts or agrees to accept any
  pecuniary benefit in consideration of
  refraining from reporting to law
  enforcement authorities the commission
  or suspected commission of any offense
  or information relating to an offense.
  It is an affirmative defense to
  prosecution under this Section that
  the pecuniary benefit did not exceed
  an amount which the actor believed to
  be due as restitution or
  indemnification for harm caused by the
  offense.</p>
</blockquote>

<p>The <strong>Restatement (Third) of Unfair Competition</strong> recognizes a privilege to disclose trade secrets in certain circumstances like public health/safety and commission of a crime <strong>or tort</strong>.</p>

<blockquote>
  <p><a href="http://www.wipo.int/wipolex/en/text.jsp?file_id=194019#LinkTarget_410">Section 40, comment c</a>:</p>
  
  <p>The existence of a <strong>privilege to
  disclose</strong> another's trade secret
  depends upon the circumstances of the
  particular case, including the nature
  of the information, the purpose of the
  disclosure, and the means by which the
  actor acquired the information. A
  privilege is likely to be recognized,
  for example, in connection with the
  disclosure of information that is
  relevant to <strong>public health or safety,
  or to the commission of a crime or
  tort</strong>, or to other matters of
  substantial public concern.</p>
</blockquote>

<p>In <a href="https://apps.fastcase.com/Research/Public/ExViewer.aspx?LTID=Ph/OZ2DnEkVOnVT08rBsG55B4uoUarP7nUfOsBmWLZFjZcoZWpjhemM1YThPjnUBAAfqtKHEhl8Ow2RtiZ6gKE1p7fYdzrezA+njf6OU4RofVgn0x9r4OFsyWkUhoOx8AduUPgXPWJt08B0U4BL7jqLOb6eIsJ40QicsEXZFpOA="><strong>Lachman v. Sperry-Sun Well Surveying Company</strong></a>, 457 F.2d 850 (10th Cir., 1972) the court cites the <strong>Restatement of Contracts</strong>, § 577</p>

<blockquote>
  <p>A bargain, performance of which would
  tend to <strong>harm third persons</strong> by
  deceiving them as to material facts,
  or by defrauding them, or without
  justification by other means is
  illegal.</p>
</blockquote>

<p>A more recent case cited Lachman as authority to find "<strong>nondisclosure agreement not binding in respect to criminal activity</strong>."<br>
<a href="https://apps.fastcase.com/Research/Public/ExViewer.aspx?LTID=Ph/OZ2DnEkVOnVT08rBsGxbWwrtlzBPegvmNjVp/aZi9CLSTkt306ZkG+AVEr8FT5nedGNWTCgOAL3ftDV+Yw9ti4bi1tBFa+WqspMi7sufOvV3CRgZC7cHeMdPH+kqidRi3K/3L04qTG60KJ2UlnaQtw/qwXsBHu8vvq6FfdtnieTTVtQv/ff+LWsi3YkLtr8PDNxEjZDiFCXELQMaQdw=="><strong>Bartnicki v Vopper</strong></a>, 532 U.S. 514 (2001)</p>

<p><a href="https://apps.fastcase.com/Research/Public/ExViewer.aspx?LTID=Ph/OZ2DnEkVOnVT08rBsGxbWwrtlzBPegvmNjVp/aZi9CLSTkt306ZkG+AVEr8FT5nedGNWTCgOAL3ftDV+Yw9ti4bi1tBFa+WqspMi7suec53WAmMbcTFhsQsXy3W1ZHEEcmVywNYuDd3e+DZOqj7tp9kI/UCc8vZswQQIKFFz+Lx/Y9YM+FUluecIokadw7/wi59vzY3V/3EY6Nw0+QA=="><strong>Fomby-Denson v. Dept of the Army</strong></a>, 247 F.3d 1366 (Fed. Cir., 2001) Is a case you could look at to see a review of some state courts which have  "declined to enforce private agreements that barred the reporting or prosecution of possible crimes."</p>
