A Non-Circumvention
Clause/agreement, also referred to as a non-circumvent agreement, represents a
legal document exchanged between two persons or two organizations who want to
share some information that may be confidential for the purpose of entering
into a business relationship. This agreement blocks the parties from going
directly to each other's supplier or customer with the intent to
"bypass" or circumvent the other party upon learning the name of each
other's partners. For instance, a Non-Circumvention Clause could provide as
follows:
"NON-CIRCUMVENTION CLAUSE
- It is understood and agreed that the parties would like to exchange certain information which are confidential, and the Parties may learn from one another, the trade secrets, names and telephone numbers of investors, borrowers, lenders, agents, brokers, banks, lending corporations, individuals and/or trusts, or buyers and sellers hereinafter called “Contacts” not otherwise known or established before the date of this Agreement.
- To ensure the protection of such information and in consideration of the agreement to exchange the said information, the parties agree as follows:
2.1. It is agreed
that in the event of termination of the Consultant’s engagement with the Firm
for any reason, the Consultant shall not solicit business from current clients
or clients who have been retained by the Firm in the first twelve (12) month
period immediately preceding the Consultant’s termination
unless such clients were procure to the Firm through the joint efforts of the
Consultant and the Firm, and provided further that no breach of this term shall
arise where a client independently seeks the services of the Consultant herein
or the Consultant is engaged by another firm already acting for such clients.
2.2. In case of
circumvention, the Parties agree and guarantee that they will pay a legal
monetary penalty that is equal to the commission or fee the circumvented Party
should have realized in such transactions, by the person(s) engaged on the
circumvention for each occurrence. If either party commences legal proceedings
to interpret or enforce the terms of this agreement, the prevailing Party will
be entitled to recover court costs and reasonable advocates’ fees."
Such
agreements are important for businessmen who wish to protect their customer/client information from partners, independent contractors and or employees leaving
such a firm on termination of engagement for whatever reason.
