Updated November 24, 2020:

An NCND, also called a non-circumvention/non-disclosure agreement, is used in the early stages of a business agreement. It is commonly used when the buyer and seller aren't familiar with each other but have been connected by a broker or middleman to make a transaction. An NCND agreement makes sure that the brokers or intermediaries aren't left out of the transaction. In other words, it is an agreement to protect the broker in case the buyer and seller want to pursue the deal but leave the broker out of it.

Many trade agreements follow a standard chain, with the product moving from the seller to a broker to another broker and then to the buyer. NCNDs protect the middle brokers so that they aren't cut out of the deal and so that information about the other groups involved in the trade process isn't passed to outside parties. NCNDs are valid for a specific length of time, which is generally two years.

There are two parts of an NCND agreement:

  • Part A, which includes special conditions that establish what is unique about this agreement. This section must be completed by each party.
  • Part B, which includes general conditions and other provisions that are standard for all NCND agreements. These clauses follow the ICC General Conditions for Non-Circumvention and Non-Disclosure Agreements.

Both parts are required to create a valid NCND that must be agreed to by all parties involved.

Intermediary Services

Establishing the services to be provided by the intermediary is an important part of an NCND. One service that the intermediary can provide is communicating information. This clause is useful for an intermediary whose business involves sharing information because it allows them to communicate but limits what they can share. Simple communication can include the names of potential customers, basic information about a deal, or a service that doesn't bring direct contact from the intermediary to a third party.

If the intermediary is going to be more active, an alternative is to allow them the service of getting into contact with a third party. With this clause, the intermediary agrees to establish contact between the third party and the counterpart. Both sides can decide if the contact should be solely for a specific deal or for general potential business opportunities.

If an intermediary is allowed to offer assistance in contract negotiation, the intermediary is obligated to help the counterpart during the negotiation process until the contract is over.
The intermediary can also be granted allowance to give assistance during the performance of the contract. This clause allows the intermediary to help the counterpart with issues that may arise while the contract is in action.

Intermediary's Right to Customer Protection

The counterpart who appoints an intermediary typically allows him exclusivity with the business he is promoting. The standard practice for NCNDs is to not allow the intermediary exclusivity around the promotional activity being performed. An example of this is if a manufacturer hires an intermediary to find customers in a particular geographic region. The manufacturer would typically assume that the intermediary doesn't have exclusivity and is allowed to hire other intermediaries to make direct contact with potential customers.

In the case that the intermediary is tasked with promoting a specific deal with a third party, there is typically a clause that allows the intermediary to be the exclusive middleman for that deal.
Customer protection is given to an intermediary, which allows it to have certain rights and protections regarding future business with the third party.

Undertaking Not to Compete

It is also important for the NCND to state if the intermediary is allowed to act for the counterpart's competitors. If this is not allowed, it should also state what the intermediary needs to do to avoid this from happening.

A typically NCND offers two alternatives:

  • The intermediary agrees to a non-competition clause, or 
  • The intermediary is free to act for competitors

Unless all parties agree on the intermediary's non-competition status, the agreement defaults to the rule stated in the general conditions. That clause says that the intermediary is obligated to not act for a counterpart's competitors unless it has been given an exclusive right to a certain type of business.

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