A non-circumvention agreement can protect your bu siness from being undercut or taken advantage of during contractual negotiations with third parties, especially where the third party in question may obtain more advantageous terms from accessing your resources. This type of agreement also often includes non-disclosure and confidentiality clauses which further protect your company’s from unscrupulous individuals and companies.
An instance where you may require a non circumvention agreement:
You own a company that designs high-quality technology products. You, party A, design a modem to be distributed to stores nationwide. Party B, is a high-quality technology manufacturer. You have contacted party B to manufacture these modems to your design specifications and then to ship them to some IT stores (party C). The non-circumvention agreement prevents party B from creating these modems for a lower fee arrangement than offered by party A. It also prevents party B from bypassing party A altogether and going directly to party C with the same products.
The purpose of the Non circumvention agreement is to ensure that the identity of the introducing party’s contacts remain confidential, preventing the third party from circumventing the introducing party by engaging with their contacts or using their resources without obtaining their express consent. Essentially, once this agreement is signed by all active parties, and if it is violated, the violating parties will be responsible to pay penalty fees equal or greater than any remuneration the introducing party would have received had the contract not been violated.
Basically, if you sign the contract, you keep the introducing party included in any transactions and do not go behind their back or you will be liable to pay them hefty fees!
As an entrepreneur, you may sometimes encounter individuals who will seek to outmaneuver you. We advice that during all negotiations you ensure that all parties to the transaction execute Non Circumvention agreements to ensure that your interests are adequately protected from unfair competition.