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:
- 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.