What is a Non-Circumvention/Non-Disclosure Agreement?

An NCND agreement between two businessmen

A non-circumvention/non-disclosure agreement, or an NCND agreement, is intended to be used in the preliminary stages of a business agreement. This agreement is designed to protect the occasional middlemen in international and domestic trade that promote businesses, connect with third parties, assist in negotiations, among others.

When should I draft an NCND Agreement?

NCND Agreements are commonly drafted when the buyer and the seller have been connected through a middleman or a broker to familiarize themselves and or to complete a transaction. It is the signing party’s responsibility to assign the middleman’s activity.

One alternative to drafting an NCND agreement is to limit the middleman’s activity to a simple supply of information such as the names and addresses of potential customers. The middleman, otherwise known as an intermediary, is typically granted access to a specific level of exclusivity regarding the business he or she agrees to promote. 

Another alternative is to include the middleman in more information and involvement in the contact between the buyer and seller. One could also include the middleman in the contract negotiation, where they help the buyer negotiate their terms and conditions. The last alternative would involve the middleman assisting during the performance of the contract. This permits the middleman to help the buyer overcome possible problems throughout the transaction.

What Provisions Are Included in an NCND Agreement?

The agreement is typically made up of two parts, (1) Special Conditions and (2) General Conditions.

Special Conditions clarify the terms that are special and unique to the NCND agreement. These typically must be filled out by the parties signing the agreement. General Conditions for NCND agreements settle out the standard and common terms of the contract.  A non-disclosure provision is also essential to the NCND agreement. The signing parties are prevented from disclosing any confidential information obtained regarding the NCND agreement. This information typically includes customers names, business opportunities, price quotes, marketing plans, commercial strategies, and more.

Similarly, a non-compete provision is not uncommon in an NCND agreement. It is up to the parties to decide the extent of whether they should include a non-competition provision or a provision that allows the middleman to remain free to act for competitors of the counterpart. If the parties do not include or expressly agree on a non-compete, the default rule says that the middleman will be bound not to act for the competitors of the counterpart to the extent that he or she has been granted an exclusive right to the business.

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*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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