Thursday, 26 January 2017
by Erin McAllister, Paralegal
You should consider a non-circumvention agreement if you are contracting with another business in a similar field; and your list of resources and business contacts is both valuable and secret. A non-circumvention agreement should include provisions that require amendments to the agreement to be in writing and signed by both parties, specify the state laws that will govern and interpret disputes between the parties regarding the matters covered by the agreement, and prohibit the parties from assigning their obligations under the agreement to third parties. Generally, the state laws that govern the agreement should be the state of the disclosing party.
An example of a situation where a non-circumvention agreement would be used follows.
You own a special boutique that designs high-quality blouses for women. You, party A, design high-quality blouses to be distributed to department stores nationwide. Party B, is a high-quality blouse manufacturer. You have contacted party B to manufacture these blouses to your design specifications and then to ship them to the department stores (party C). The non-circumvention agreement may prevent party B from creating these specialty blouses for a lower fee arrangement than offered by party A. It also could prevent party B from bypassing party A altogether and going directly to party C with the same products.
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