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What is a Non-Circumvention Agreement?

A Non-Circumvention Agreement ensures that in the event that the disclosing party's business contacts are revealed to the recipient, those contacts will remain confidential. The recipient cannot go behind the disclosing party's back and circumvent its business to engage directly with those contacts. 
 
Once this agreement is signed by all parties, the violating party will be liable to pay for penalty fees of the amount that the disclosing party would have received had the contract not been violated, and even more in some cases. 
 
A Non-Circumvention Agreement should include provisions that (i) require amendments (changes) to the agreement to be in writing and signed by both parties, (ii) specify the state laws that will govern and interpret disputes between the parties regarding the matters covered by the agreement, and (iii) prohibit the parties from assigning their obligations under the agreement to third parties. Generally, the state laws that govern the agreement should be the state of the disclosing party or the recipient.

When to use a Non-Circumvention Agreement:

  • You're contracting with another business in a similar field.
  • Your list of clients and business partners is both valuable and secret.

Sample Non-Circumvention Agreement

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NON-CIRCUMVENTION AGREEMENT

 

 

This Non-Circumvention Agreement (this "Agreement") is made effective as of (the "Effective Date"), by and between (the "Disclosing Party"), of , , , and (the "Recipient"), of , , , hereafter called "the Parties."

 

WHEREAS, has a business opportunity to share with and any and all other opportunities relating to or derived from such opportunity, and

 

WHEREAS, all parties have protective and actual relationships with clients and others which hold to be essential to the conduct and profitability of its enterprise, and

 

WHEREAS, all parties recognize that mutual benefit may be derived when one party is introduced to or becomes acquainted with a third party identified to it by the other party, and

 

WHEREAS, all parties recognize that any such identification or location or introduction is a trade secret and is the exclusive and sole property of the disclosing party,

 

WHEREAS, all parties desire to be bound legally as to the requirement for maintaining the privacy and security of the aforementioned relationships; and

 

WHEREAS, the Disclosing Party and Recipient have agreed to engage in a potential business opportunity which involves the following:

 

Now, therefore, in consideration of the mutual promises and covenants herein contained and other good and valuable consideration, it is mutually agreed as follows:

 

I. NON-CIRCUMVENTION

 

. NON-CIRCUMVENTION (CONTACTS). During the term of this Agreement, the Recipient agrees not to contact, initiate contact, or attempt to do business with, at any time for any purpose, either directly or indirectly, any officers, directors, shareholders, consultants, attorneys, employees, agents or other affiliates of the business opportunity, or otherwise referred by the Disclosing Party to the Recipient for the purpose of circumventing, the result of which shall be to prevent the Disclosing Party from realizing a profit, fees, or otherwise, without the specific written approval of the Disclosing Party; such approval will be specifically granted in written form by the Disclosing Party on a case-by-case basis. If such circumvention shall occur, the Disclosing Party shall be entitled to any commissions due pursuant to this Agreement or relating to such transaction.

 

. TERM OF AGREEMENT. The obligations of non-circumvention shall survive. Either party may terminate this Agreement at any time upon written notice to the other party. Termination shall not affect confidentiality obligations with respect to any confidential information or business contacts which were obtained prior to the effective date of termination.

 

. COMMISSION OR FEE AGREEMENTS. In case of breach of this Agreement, the Recipient will pay a monetary penalty that is equal to the commission or fee the Disclosing Party should have realized in such transaction. The fee or commission agreement may vary surrounding each business transaction that takes place due to this agreement.

 

II. CONFIDENTIAL INFORMATION

 

. TRADE SECRETS. All information that is exchanged or becomes known through the course of the business transaction between the Disclosing Party and Recipient shall be deemed trade secrets. Trade secrets can include, but are not limited to, prepared information packages, financials, related documents, names of potential acquisitions, intermediaries, contacts and deal sources; deal structures and financial considerations. and agree to preserve and protect the confidentiality of such information and shall not disclose this information without written permission from the other.

 

. CONFIDENTIAL INFORMATION. and will keep confidential the names and other personal information of any contracts introduced or disclosed to the other party, and that their corporations, partnerships, divisions, associates, firm, employees, contractors, agents, joint ventures, assigns, consultants, or designed will not contact, participate or negotiate in any transactions with any of the contacts without first signing a written agreement with the party who provided such contact, unless that party gives prior written consent.

 

. UNAUTHORIZED DISCLOSURE OF CONFIDENTIAL INFORMATION - INJUNCTION. If it appears that has disclosed (or has threatened to disclose) confidential information in violation of this Agreement, shall be entitled to obtain an injunction to restrain from disclosing the confidential information in whole or in part. shall not be prohibited by this provision from pursuing other remedies, including a claim for losses and damages.

 

. APPLICABILITY OF AGREEMENT. and both agree that the provisions of this Agreement extend to the employees, officers, and representatives of their respective companies/businesses.

 

. RETURN OF CONFIDENTIAL INFORMATION. Upon the written request of , shall return all written materials containing confidential information. shall also deliver to written statements signed by the Recipient certifying that all materials have been returned within five (5) days of receipt of the request.

 

III. MISCELLANEOUS

 

. RELATIONSHIP OF PARTIES. Neither party has an obligation under this Agreement to purchase any service or item from the other party, or commercially offer any products using or incorporating the Confidential Information. This Agreement does not create any agency, partnership, or joint venture.

 

. NO WARRANTY. The Recipient acknowledges and agrees that the confidential information is provided on an "AS IS" basis. THE DISCLOSING PARTY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE CONFIDENTIAL INFORMATION AND HEREBY EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL THE DISCLOSING PARTY BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE PERFORMANCE OR USE OF ANY PORTION OF THE CONFIDENTIAL INFORMATION. The Disclosing party does not represent or warrant that any product or business plans disclosed to the Recipient will be marketed or carried out as disclosed, or at all. Any actions taken by the Recipient in response to the disclosure of the confidential information shall be solely at the risk of the Recipient.

 

. ATTORNEY'S FEES. In any legal action between the Parties concerning this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and costs.

 

. ARBITRATION. In the event of any dispute, controversy, or claim related to or arising from the terms of this Agreement, the Parties hereto hereby agree that any such dispute, controversy or claim shall be settled by arbitration in accordance with the Commercial Arbitration Rule of the American Arbitration Association and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Said arbitration shall be conducted in . Such dispute resolution shall be in accordance with the applicable substantive laws of . The prevailing party shall be entitled to all fees and costs arising, including, but not limited to, attorney's fees and costs.

 

. GENERAL PROVISIONS. This Agreement sets forth the entire understanding of the Parties regarding confidentiality. Any amendments must be in writing and signed by both parties. This Agreement shall be construed under the laws of the state of . This Agreement shall not be assignable by either party. Neither party may delegate its duties under this Agreement without the prior written consent of the other party. The confidentiality provisions of this Agreement shall remain in full force and effect at all times after the effective date of this Agreement. If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the remaining portions of this Agreement shall remain in full force and effect and construed so as to best effectuate the original intent and purpose of this Agreement. All of the obligations contained in this agreement are mutual and reciprocal. This agreement shall be binding on the Parties, their subsidiaries, agents, brokers, divisions, associates, employees, heirs, affiliated companied, assigns or designees.

 

. SIGNATORIES. This Agreement shall be executed by and and delivered in the manner prescribed by law as of the date first written above.

 

DISCLOSING PARTY:

 

 

 

By: Date:

 

 

 

RECIPIENT:

 

 

 

By: Date:

 

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Non-Circumvention Agreement FAQs

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  • What is a Non-Circumvention, Non-Disclosure Agreement?

    A Non-Circumvention, Non-Disclosure Agreement contains provisions that prohibit a recipient of information from disclosing confidential information and engaging with the contacts of the disclosing party.

  • Is a Non-Circumvention Agreement enforceable in California?

    Non-Compete Agreements and provisions are not enforceable in California. However, there are statutory exemptions. Consult with an attorney for more information about non-compete exemptions in California.

  • What is a non-disclosure clause?

    A non-disclosure clause prohibits specific parties to an agreement from releasing confidential information. This clause is primarily intended to deter intellectual property theft. With Rocket Lawyer, you can create a Non-Disclosure Agreement for free.

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