NCND Agreement (Non-Circumvention and Non-Disclosure Agreement)

When a company decides to export its products to a new country, it typically lacks knowledge about that market and its potential buyers. As a result, it is common for companies to use intermediaries to assist in the internationalization process.

Intermediaries play a fundamental role by helping the company understand the new market and its cultural particularities, as well as facilitating contact with potential buyers. However, the intermediary relationship can be very unequal. After obtaining the necessary market knowledge, the company might choose to "circumvent" the intermediary, establishing direct contact with distributors or final customers.

The NCND (Non-Circumvention, Non-Disclosure Agreement) Contract is an effective solution to protect the intermediary in this relationship. This contract offers protection for intermediaries by ensuring the confidentiality of the information shared during negotiations and preventing the intermediary from being "circumvented." Therefore, intermediaries are the main beneficiaries of the NCND (Non-Circumvention, Non-Disclosure Agreement) Contract, which aims to protect them with contractual clauses that guarantee compensation for their information and efforts.

What are the NCND Agreement's goals?

An NCND Agreement has two main goals:

1. Non-Circumvention: To protect the intermediary against the risk of being 'circumvented' by the other party and therefore not being paid the commission for its services.

   
   

2. Non-Disclosure: To ensure confidentiality. This clause prevents either party from sharing any sensitive information obtained under the NCND agreement.

   
   

NCND Agreement's importance

The NCND Agreement's importance lies in the protection it offers to intermediaries, ensuring that others do not exploit their efforts and privileged information without proper compensation. It also prevents the spread of sensitive information and gives the parties a legal foundation to claim compensation or damages if any clauses are breached.

NCND Agreement's structure

NCND Agreement's essential clauses:

1. Parties' obligations: A clause specifying the non-disclosure and non-circumvention obligations, the intermediarie's exclusive duties, and their compensation, including the currency and the exchange rate to be applied.

2. Penalties and Consequences: A description of the applicable consequences and penalties in the event of a breach of the contract.

3. Applicable law: In international contracts, the applicable law to the contract should be clearly chosen.

4. Arbitration or dispute resolution: It is advisable to choose arbitration as the method for dispute resolution and to define the governing law applicable to the arbitration clause. If traditional litigation is preferred, it is essential to establish the competent jurisdiction for resolving disputes.

   
   

Key considerations in Drafting an NCND Agreement

Drafting an NCND Agreement requires attention to several details to ensure its effectiveness and legal applicability. The clauses must be drafted clearly and precisely to prevent ambiguities that could lead to legal uncertainty. Since these contracts are often bilingual, it's important to use professional translators fluent in both languages to avoid misunderstandings or inconsistencies. It is important to customize the contract according to the specific needs of the business and the parties involved, rather than using generic templates, as this helps to minimize ambiguities and provides greater legal certainty for all parties.

Consulting a specialized attorney is highly recommended to ensure that the contract is thoroughly reviewed and all legal nuances are properly considered.

Final remarks

The NCND Agreement is an essential tool for protecting intermediaries in commercial transactions. Properly drafting the agreement ensures that intermediaries feel secure when sharing information and establishing business relationships without fear of potential losses.

Seeking legal guidance is crucial to ensure that the NCND Agreement fulfills its purpose and effectively safeguards the interests of the parties involved.