💡 Plain English Explanation

A non-circumvention clause prevents the parties from bypassing each other to work directly with contacts, customers, suppliers, or other third parties that were introduced through the NDA relationship. If Party A introduces Party B to a valuable supplier, Party B cannot cut Party A out and go direct.

Important: Non-circumvention is NOT a standard NDA provision. It goes beyond confidentiality and creates significant business restrictions. Many parties try to sneak it into NDAs to gain additional leverage.

⚠ Why It Matters

Red Flag: Non-circumvention clauses in NDAs are often a sign that one party is trying to extract more than confidentiality. These provisions can restrict your business in ways you didn't anticipate.

Legitimate Uses: Non-circumvention may be appropriate in broker relationships, referral agreements, or joint venture discussions where introductions have independent value.

Enforcement Issues: Overly broad non-circumvention clauses may be unenforceable as restraints on trade. Courts scrutinize these provisions carefully.

🚩 Risk Factors

📄 Clause Versions

Balanced Version: Limited non-circumvention with pre-existing relationship carveouts and reasonable duration. 
Non-Circumvention.

(a) Limited Restriction. During the term of this Agreement and for a period of two (2) years thereafter, neither party shall directly or indirectly contact, solicit, or engage in business with any third party that was specifically introduced by the other party in connection with the Purpose, with the intent to circumvent the introducing party's legitimate business interests.

(b) Pre-Existing Relationships. This restriction shall not apply to any third party with whom the receiving party had a documented business relationship prior to the introduction.

(c) General Business. Nothing in this section shall restrict either party from engaging in their ordinary course of business, responding to unsolicited inquiries, or competing for business through normal commercial channels.

(d) Notice and Cure. Before claiming a breach of this provision, the allegedly aggrieved party shall provide written notice and a thirty (30) day opportunity to cure.
Introducing Party Favor: Broader restrictions, longer duration, compensation rights for circumvention. 
Non-Circumvention.

(a) Covenant Not to Circumvent. The Receiving Party agrees that for a period of five (5) years from the date of this Agreement, it shall not, directly or indirectly:
    (i) Contact, solicit, negotiate with, or enter into any agreement with any person, entity, or business opportunity introduced or identified by the Disclosing Party;
    (ii) Interfere with any actual or potential business relationship of the Disclosing Party;
    (iii) Divert or attempt to divert any business or business opportunity away from the Disclosing Party; or
    (iv) Use any Confidential Information to identify or pursue contacts, customers, or opportunities introduced by the Disclosing Party.

(b) Compensation. In the event of any circumvention, the Receiving Party shall pay to the Disclosing Party a finder's fee equal to fifteen percent (15%) of the gross revenue generated from any circumvented transaction during the first three (3) years of such transaction.

(c) Injunctive Relief. The Receiving Party acknowledges that a breach of this section would cause irreparable harm not adequately compensable by monetary damages, and agrees that the Disclosing Party shall be entitled to injunctive relief without the need to post bond.
Receiving Party Favor: Narrowest restrictions, short duration, broad carveouts for normal business. 
Non-Circumvention.

(a) Limited Covenant. During the term of this Agreement only, neither party shall directly solicit any third party specifically and expressly identified in writing by the other party as a protected contact, solely for the purpose of pursuing the specific transaction described in such writing.

(b) Extensive Carveouts. This covenant shall not apply to:
    (i) Any person or entity with whom the receiving party has any prior relationship;
    (ii) Any contact initiated by the third party;
    (iii) Any publicly available business opportunity;
    (iv) Normal competitive business activities; or
    (v) Any contact made through employees who were not personally involved in receiving the protected contact information.

(c) Expiration. This covenant shall automatically terminate upon the earlier of (i) one (1) year from the date of this Agreement, or (ii) termination of negotiations between the parties for any reason.

(d) No Implied Restrictions. Nothing in this Agreement shall create any non-compete, non-solicitation, or other restrictive covenant except as expressly stated in this section.

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