Non-Circumvention Agreement Template

To work properly and to protect their interests and rights, any business engaging with others needs a host of protections. A lot of these come in the form of legal documents that are signed between two parties to offer these protections. Out of these, one often forgotten agreement is the Non-Circumvention Agreement. That is precisely what we are going to talk about today. 

First, we will discuss what it is and then, move on to talking about its importance, key components, and the risks of using inadequate agreements, before introducing FreshDox.com’s 100% customizable and legally sound template to draft your own agreement. So, without further ado, let’s dive right into it!

What is a Non-Circumvention Agreement and Why Should I Care?

Given how competitive the world of business is today, partnerships and deals often hinge on the exchange of confidential information (such as trade secrets, market research, internal reports, competitor analysis, demographic surveys, internal documentation, etc.) and contacts. But how do you ensure that the parties involved do not bypass each other to seek a more advantageous deal directly with the very contacts introduced or shared during the collaboration? Especially with the confidential information they have, which can easily give anyone else the competitive edge?

Signing a typical contract with a service provider will only offer the basic level of protection—non-compete, for example, or a non-disclosure agreement. This is not sufficient and businesses have legal ways to tiptoe around the clauses held in these agreements. A laser-targeted and legally sound agreement is required for this specific purpose.

Enter the Non-Circumvention Agreement.

It lays down covenants against circumventing the other party. It offers severability and works as a stronger confidentiality agreement that protects not only business transactions but long-term business relationships as well.

The agreement outlines clear terms under which business information and contacts can be shared and used for the collaboration’s purposes freely, but not against each other or in a way that harms the other party. This is crucial for protecting proprietary information, confidential data, and any trade secrets (often, mainly for the prevailing party). From joint ventures to multi-tier deals between large conglomerates, the provisions of this agreement protect all companies and their subsidiaries under the laws of the state.

As such, the Non-Circumvention Agreement builds trust and cooperation among business entities, protects investments, and secures any business opportunity.

Importance of a Non-Circumvention Agreement

The Non-Circumvention Agreement is instrumental for successful business partnerships and collaborations in many ways. This agreement, when drafted carefully and comprehensively, provides a legal framework to ensure that all parties respect the mutual interests, obligations, ethics, rights, and contributions made in the pursuit of business opportunities.

The terms of this agreement act as prior written consent that no party will misuse any confidential information or contacts against the disclosing party to gain a competitive edge themselves, or to lower the competitiveness of the other party. This Non-Circumvention Agreement is particularly valuable in industries where introductions to key stakeholders, proprietary methods, and sensitive information are critical competitive advantages. For example:

• In many business dealings, especially in sectors like finance, real estate, and technology, one party may introduce the other to influential industry contacts or key stakeholders. Without a Non-Circumvention Agreement, there is always a risk that the introduced party could bypass their partner and approach these contacts directly, cutting the other party out of the deal. This can result in a loss of opportunity and trust. Of course, this will also undermine the initial collaboration. It does not matter just how much trust you have that you will not be cut out of the deal—it is always advised to proceed with this agreement before such an event.
• In fields such as manufacturing, tech development, or product design, businesses often share proprietary methods, techniques, or blueprints during partnerships. In these cases, again, without the protection of a Non-Circumvention Agreement, there is the risk that a partner could use these methods to create a competing product or even share it with a competitor, damaging the original business’s competitive edge. The same argument can be made here as well—it simply does not matter how much you trust them. Always have legal backing, just in case.
• Sensitive business information, such as market research, customer lists, pricing strategies, and financial reports, can give a company a significant advantage. A Non-Circumvention Agreement also ensures that any shared sensitive information is not misused or shared with competitors to further protect the integrity and future success of the business.

As the Non-Circumvention Agreement formalizes the obligation to honor the established channels of negotiations and transactions, the risk of exploitation is remarkably minimized, if not entirely eliminated. Furthermore, any breach of this agreement can easily pave the way for quick legal action.

All collaborators should ideally receive their fair share of benefits from joint ventures. The disclosure of confidential information or misuse of one party’s intellectual property can hamper this significantly. So, to build trust and have legal recourse ready, it is highly recommended to begin any collaboration, joint venture, or project with a Non-Circumvention Agreement in place.

Operating Without a Comprehensive Non-Circumvention Agreement

Needless to say, if you are going to operate without a legally sound, comprehensive Non-Circumvention Agreement and share any confidential information, then the receiving party can share such information with a competitor or misuse it to gain a competitive edge. This will be unethical, but under applicable law in most cases, as there are no clear terms prohibiting this action.

Such transactions often hamper the business relationship and damage trust. Also, you have no way to force the receiving party for the return of confidential information or its deletion. With no waiver or warranty, the other party can freely misuse any trade secret, for example, and avoid dispute resolution on your terms.

And do not make the mistake of thinking that an NDA will be sufficient. Its clauses are meant to offer a slightly different type of protection, not necessarily against circumvention and cutting out stakeholders, for example. When one party assigns confidential information to another, it is important to control how it is used. The NDA or other documents might not be sufficient for protection against such party.

Clearly, the absence of a proper, well-drafted Non-Circumvention Agreement opens the door for parties to sidestep existing collaborations in favor of direct negotiations. This will most likely compromise the original party’s investment in time, resources, and proprietary information.

This not only leads to lost opportunities but can also result in reputational damage and strained industry relationships. Moreover, resolving disputes arising from circumvention efforts without a formal agreement can be complex, costly, and time-consuming, detracting from the business’s core operations and growth.

A written agreement specifically tailored for this type of possibility is extremely important, therefore. And only a well-drafted agreement can have the proper legal soundness, enforceability, and applicability.

Key Elements of a Non-Circumvention Agreement

The exact details and clauses inside a Non-Circumvention Agreement will vary from transaction to transaction and business to business. But in broad strokes, the entire agreement will often have some common sections. Here are the key elements that a good agreement should ideally include:

• Identification of Parties: First of all, a proper Non-Circumvention Agreement will clearly define the parties involved in the agreement with legal company names. Do not forget to mention the roles and responsibilities of all parties and how they are related to each other. Also, mention any subsidiaries that are also going to be involved in the collaboration or partnership.
• Definition of Confidential Information: Next, the agreement will specify what constitutes confidential information and the scope of information covered by the agreement. You need to be very clear about what constitutes trade secrets, intellectual property, confidential records, etc.
• Term of Agreement: This section outlines the duration for which the agreement is valid, including any conditions for renewal or termination. If you believe the project will go on for three months and you might require another couple of weeks to get back full control over your proprietary assets or shared resources, you should account for that, add in some grace period to stay on the safe side, and stipulate this duration in the agreement.
• Non-Circumvention Clause: This is the most important piece. Here, you will lay down detailed provisions and clauses that prohibit the parties from bypassing the agreement to directly engage with introduced contacts or use proprietary information. You can prohibit contacting stakeholders directly, using trade secrets beyond the scope of the project, and so on. It completely depends on your project’s arrangements.
• Remedies for Breach: Next, you should also outline the consequences and legal remedies available in the event of a breach of the agreement. Of course, some recourse has to be provided so both parties are protected, including in the case of accidental breaches.
• Governing Law: Lastly, designate the legal jurisdiction and laws that govern the agreement and the resolution of disputes. Shortly after the arbitration clause, you will include spaces for the legally binding signatures of all parties, along with dates, to enforce the agreement.

FreshDox.com’s Non-Circumvention Agreement Template

Wondering how to even get started? Well, fret not! We have just the thing you are looking for. Here at FreshDox.com, we understand the critical need for businesses to protect their interests, confidential information, proprietary processes, and professional relationships in a collaborative venture. To this end, we have a professionally designed Non-Circumvention Agreement Template that has provisions and clauses to cover all bases and is 100% customizable!

Made by legal experts, our template offers comprehensive and legally sound protection for your business dealings in any industry. With us, you have the promise of clarity, compliance, and security. Most importantly, you have a customizable framework that can be adapted to suit various needs and collaborative scenarios.

You can subscribe to FreshDox.com today and gain access to our Non-Circumvention Agreement Template alongside countless other business and legal document templates in both Word and PDF formats. On top of that, we offer a 14-day trial period for those who are not sure about committing. Using this trial, you can easily try our Basic (up to three document template downloads a month) or Premium (unlimited downloads) Plans in a risk-free way!

Any business seeking to fortify its collaborative ventures and protect its competitive edge will benefit from our robust Non-Circumvention Agreement Template. Now, you too can engage in partnerships and negotiations confidently, knowing full well that your contributions and opportunities are safeguarded comprehensively. Wait no more—sign up for a FreshDox.com account today and secure your business interests for better, more trustworthy joint ventures and collaborations with our Non-Circumvention Agreement Template in no time!