Non-Circumvention Clause

Definition - What does Non-Circumvention Clause mean?

A non-circumvention clause is a clause that is contained within certain contracts between commercial parties that dictate the terms under which the combined collaborations between parties will be used. It states any extensions of any ideas that arise within the collaboration of the companies. This would specifically preclude both parties from using any ideas or information that they gather through the joint enterprise for something that would only benefit themselves or that is not split equally between the original parties.

Justipedia explains Non-Circumvention Clause

If either party to a contract that included a non-circumvention clause were to breach the clause, they could be sued successfully for lost cost opportunity by the other party, and the latter would stand to gain half of any profits that were gained as the result of the one party's use of the joint collaborative information.

If the aggrieved party requests in court that the action be stopped instead of them collecting a portion of the proceeds, the judge might determine that the resulting business is illegal under the terms of the original agreement. In most cases, however, a monetary sum is paid for the past income derived from the idea, and an order for future shares will be made.

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