Non-Disclosure, Non-Circumvention and Non-Competition Agreements - Not Exactly the Same
We are frequently asked by visitors to us website if Non-disclosure, Non-circumvention and Non-competition agreements (or restrictive clauses in agreements) are the same. Others ask what the difference between the three is. One of the factors that contribute to the confusion is the fact that there many agreements include more than one of these three restrictions.
In this article we will try to explain the difference between the three types of restrictions.
Non-Disclosure Agreement (or clause) is designed to obligate one of the parties (or more) not to disclose or communicate confidential information to any third party and protect such information from disclosure. These agreements (or clauses) are usually found in two instances: when entering into a new business activity or collaboration, or when hiring an employee.
Non-Circumvention Agreement (or clause) is designed to obligate one of the parties (or more) not to contact, deal with or otherwise become involved with any entity or any other entities or parties introduced, directly or indirectly, by or through the other party, without the specific approval of the other party. These agreements are complementary to Non-competition Agreements.
Non-competition Agreement , also known as non-compete agreement is designed to restrict potential competition. Usually the agreement (or clause) will restrict the other party from performing similar business activity for a specific period within a specific geographical territory. These agreements are also usually found when entering into a business activity or collaboration, or when hiring an employee. These agreements protect the business by
Although each type of agreement (or clause) has a different intention and designation, they also have similarities. For example, an important condition in a non-circumvention agreement is that the obligating party will agree to keep completely confidential the names of any corporations or individuals, introduced by the other party or parties. Therefore, it is often advised to business owners to include all three contractual restrictions in their agreement.
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