Non-circumvention (or Non-circumvent) agreement, clause or understanding
This is an Instrument used in the early stages of a business transaction arranged by distributors, sales representatives, brokers, recruiters, staffing, sourcing companies or other consultants when bringing together various business opportunities. A non-circumvent agreement is often used to protect the ideas and opportunities under business arrangements. It generally provides that each party shall use the other party’s information only for the purpose of pursuing a business relationship between the parties. In the event the parties elect not to pursue a business relationship, neither party shall make any use of the other party’s information. It is often signed together with a non-disclosure agreement. Its purpose is to ensure that
- The intermediaries are not by-passed and
- The information disclosed during the negotiations is not revealed to any external or unauthorized party (often non-disclosure entity of a non-circument agreement.)
A non-circumvention agreement is a legal document that is intended to protect you and your business from being undercut or taken advantage of during special contractual agreements with other businesses or entities. This type of agreement may also include a non-disclosure and confidentiality clauses to further protect your efforts, whether you are acting as an individual consultant or as a company. The non-circumvention clause or agreement’s purpose is to ensure that the identity of the introducing party’s contacts remain confidential, that the other party will not circumvent the introducing party to engage with their contacts.
If violated, once signed by all active parties, the violating parties will be responsible to pay penalty fees of triple the amount that the introducing party would have received had the contract not been violated.
Bottom line, if you sign the agreement, agreeing to paying someone a fee, you keep the introducing party included and don’t benefit from their introductions or efforts by attempting to go behind their back (for the purpose of not paying fees) or you’ll pay hefty fees.
Here are a few samples where a party would want to speak with legal representation for discussing the use of a non-circumvent type clause for identifying the specifics of a non-circumvent clause:
- Recruiters introducing candidates for clients
- Medical Product distributors working with other medical product distributors
- Sales teams with multiple sales agents aligning with client (manufacturer) products or services