Contractual agreements form the daily basis of a business to undertake any important business proposals or deals. They form the core proof of legally justified means between the parties who gave their consent into propagating the mutually decided decision.

Non-Disclosure Agreements

Non-disclosure agreements, in layman term, is a legal document where one party forbids the other party to disclose any sensitive information which, if disclosed by other party, then proves to be a detriment to the concerned party. Sometimes , it is also referred to as “Confidentiality Agreement” or simply NDA.

Non-Compete Agreements

Non-compete agreements are those agreements which the employer mainly makes with the employees so that they may not use any secret and sensitive information of their with their rivals or competitors or use any of the practice or information learnt under the company even after leaving the company. They even cannot set up any business or implement any business strategy which forms direct relation to the concerned company they worked earlier for a significant period of time.

Non-Circumvention Agreements

Non-Circumvention Agreements are those agreements which are basically signed between two parties to promote ideas or opportunities under a business deal through contact of another introducing party between both of them. It restricts the later party to use the contact of the introducing party directly which has been given by the former party. Infringement of the agreement usually brings huge monetary penalty to the former party by the circumventing party. For example, Company A is a company which designs clothes for spring collections. They sign a non-circumvention agreement with Company B for manufacturing of those collections. Company B gets the raw materials through Company C and mentions that information in the agreement. Company A cannot contact Company C directly and procure raw materials to manufacture clothes at a low price or it will have to face lawsuit by the Company B.

What is their importance in any business?

Non-disclosure agreements are necessary to protect sensitive information of the company. It also helps to protect intellectual property rights. For example, if your business has patent rights over any invention or innovation then these type of agreements protect such information. It protects the financial information as well as own marketing strategy of your business. Then non-compete agreements lower the scope of your own employees plotting against you and using your own information to start out as your competitor. It does not allow your arch rivals to manipulate your employees and use unethical ways to boost their sales using your ideas. It prohibits any employee to give out any sensitive information, be it trade-secrets, publicly. Non-circumvention agreements does not let the other party use your ideas or opportunities for their own benefit and at a free price and thus enlarging your business profits margins in the long run and safeguarding your own business opportunity.

So, we see that each of the different types of agreement prove to be beneficial in different ways, thus protecting and enlarging your team and opportunity of your business at the same time. They must be considered for any business, even for a Startup with few employees. Information can be stolen any time and thus legal documents are the best means to take precautionary actions .


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