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What is a non-circumvention non-disclosure agreement (NCNDA)?

A non-circumvention non-disclosure agreement is used in the preliminary stages of a business transaction where the seller and buyer are brought into contact with each other by one or more intermediaries to fulfill the transaction.

By signing a non-circumvention non-disclosure agreement, the party receiving information agrees not to disclose, use or exploit confidential information, except in agreed circumstances or with the consent of the other party. It also specifies the duration for the confidentiality obligations to apply.

What is the purpose of an NCNDA?

The purpose of such agreement is to ensure that:

  1. the intermediaries who brought the buyer and seller together are included in future negotiations and not by-passed without compensation for their involvement and
  2. the information disclosed during the negotiations is not revealed to any external or unauthorized party. The (NCNDA) Non-Circumvention & Non-Disclosure Agreement is intended to protect the rights of occasional intermediaries in international trade.

Is non-circumvention the same as a non-compete agreement?

The main purpose of a non-circumvention agreement is to protect parties from being left out in a transaction without fair compensation whereas a non-compete agreement protects business owners by restricting their engagement in similar business activities during the length of the agreement.

What should a NCNDA include?

The important elements of a non-circumvention non-disclosure agreement are:

Information about the parties: this includes the name and address of the parties who are involved in business dealings, for sharing and receiving the information.

Intermediaries fee, roles, and responsibilities: The main purpose of intermediaries is to connect two different parties who want to do business together. The intermediaries should also be compensated for their effort.

The time period for confidentiality: this includes the time frame for maintaining confidentiality through NDA.

Definition of confidential information: an organization has to deal with large amounts of data. So, it is very crucial to distinguish those data from the level of importance. The data which needs to be confidential should be properly categorized in the NDA agreement.

Permitted Use of the Information: This clause explains the confidential information that can be used and the purpose of its use.

Jurisdiction: The jurisdiction to which the convention is subject in the event of a conflict and the law applicable in the event of a dispute.

Is a non-circumvention agreement legally binding?

Yes, a non-circumvention non-disclosure agreement is a legally binding document that requires involved parties (parties doing business and intermediaries) to maintain confidentiality throughout the duration mentioned in the NDA agreement. 

What is the difference between an NCNDA agreement and a non-disclosure agreement?

A non-circumvention agreement ensures that the intermediaries who brought the buyer and seller together are not excluded from future negotiations, whilst a non-disclosure agreement is a contract by which a party receiving information from another party agrees to keep such information confidential.

Are non-circumvention clauses enforceable?

The enforceability of non-circumvention clauses is mostly limited because the employer’s proprietary interest will always be secondary to public policy considerations. 

The employer will be required to show that a non-competition, non-solicitation, or non-circumvention agreement is reasonable and necessary first. These clauses are enforceable in certain situations. For instance, if the restriction is for a limited duration or if it has a well-defined and justifiable geographic scope. 

Create an NCNDA with Zegal

In conclusion, a Non-Circumvention Non-Disclosure Agreement (NCNDA) plays a crucial role in business transactions involving intermediaries. It serves dual purposes: ensuring that intermediaries are fairly compensated and involved in future negotiations and maintaining the confidentiality of information shared during these transactions.

While it shares some similarities with non-compete agreements, its primary focus is protecting intermediaries’ rights and contributions rather than restricting competition.

Overall, the NCNDA is a vital tool in international trade and other business dealings, safeguarding the interests of all parties involved and ensuring a fair and transparent process.

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