What is a Non-competition / Non-solicitation / Non-circumvention clause?..
Restrictive covenants such as non-compete and non-solicit provisions are useful if the parties are sharing information that would be damaging to their business if it was used by the other party. For example, if the information includes client lists or sales leads, the recipient would be restricted from using these for their own advantage. This will prohibit the recipient from engaging in any kind of relationship with a competitor of the business for a certain period of time and within a certain geographical location so that no confidential information may be disclosed to the competing company. As restrictive covenants, by their nature are restraints on trade, the scope of these restrictions must be reasonable under the circumstances. In the case of a confidentiality agreement where the information disclosed has inherent value (i.e. client information, sales leads, etc.), a non-circumvent provision restricts the recipient's ability to act on information given under a confidentiality agreement outside of the scope of the agreement. For example, a company receiving sales leads from a sales representative is obligated not to circumvent the agreement to exploit those leads. That is, the recipient cannot use those leads for his/her own purpose without first providing the information gathered to the company. Usually, the non-compete, non-solicit, and non-circumvent will survive the termination of the agreement. That is, for [X] period of time after the termination date of the agreement, the recipient of the information under the confidentiality agreement is still bound by the restrictions within such clause. In the case of a non-circumvent, sales leads that are somewhere in the pipeline will have a chance to materialize, or in the case of non-competition, it gives the company some breathing room before the recipient is able to compete without materially breaching the agreement. Therefore, the termination date of the agreement becomes very important on calculating the length of time that the recipient's actions may constitute a breach of the agreement.
Blogs related to this clause:
Can emails be considered confidential information, and therefore can come under the obligation to return or destroy?
June 1 2017
COURT ORDERS DELETION OF CONFIDENTIAL EMAILS Pakage Apparel Inc [...]
September 3 2015
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