What is a Non-Circumvention Agreement?

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What is a Non-Circumvention Agreement?

The business world runs on deals, many of which can come about when two parties work together to do business with a third party.  A non-circumvention agreement prohibits either of those two parties from cutting the other one out of the deal by working directly with the third party.

For example, Company A is a computer repair business and Company B is a software development firm.  Company A has several clients that need proprietary software.  Company A approaches Company B with a proposal to develop this software for Company A’s clients.  Company A wants to ensure that Company B does not deal directly with A’s clients or use A’s client list for new business development.  In this situation, a non-circumvention agreement can protect Company A’s interests.

A non-circumvention agreement can be either unilateral — restricting one party alone — or mutual, where both parties are restricted from circumventing the other in a business deal.  Non-circumvention agreements may be used alone, or in combination with other agreements typically used to protect trade secrets and intellectual property, like confidentiality and non-compete agreements.

Once a non-circumvention agreement has been entered into, any party violating the terms of the agreement can be sued for damages.  This may include compensating the damaged party for lost profits or an injunction that prohibits the breaching party from doing business outside the agreement.

The benefits of a non-circumvention agreement for the protected party is that there is now a legally binding document that protects their trade secrets and solidifies their position as a party to the deal.  For the restricted party, the benefit is more indirect.  Without a non-circumvention agreement in place, the business opportunity may be lost.

When you are facing any type of business dispute, you need an experienced Arizona trial attorney to obtain the best possible result. Contact Williams Mestaz, L.L.P., at (602) 256-9400 to speak with us about your case.

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