Estimated reading time: 4 minutes

In international trade, many transactions originate through brokers, intermediaries, or facilitators who connect buyers and sellers across borders. These intermediaries often contribute more than simple introductions. They provide market access, strategic contacts, pricing intelligence, and transaction structuring support. A Non-Circumvention Non-Disclosure & Working Agreement (NCNDA) exists to protect this commercial value.

Parties execute an NCNDA early in negotiations, before signing any definitive sales, supply, or project agreements. Its primary role is to protect confidential information and prevent parties from bypassing the intermediary who enabled the business opportunity.

Primary Objectives of a Non-Circumvention Non-Disclosure Agreement

Preventing Circumvention

The core purpose of an NCNDA is to prevent circumvention. Circumvention occurs when a party receives an introduction through an intermediary and then attempts to exclude that intermediary from the transaction and proceed independently.

A strong NCNDA ensures that neither party may engage in direct or indirect business with the introduced counterparty without the involvement or consent of the intermediary. The definition of “Business” must be broad enough to cover all commercial activities arising from the original introduction, including follow-on transactions and related projects.

Protecting Intellectual Property and Confidential Information

During negotiations, parties often disclose sensitive information such as trade structures, supplier identities, pricing models, logistics routes, technical data, and proprietary methodologies. The Non-Disclosure element of the NCNDA restricts the use and dissemination of this information.

This protection applies regardless of the format in which parties share information, including written, electronic, oral, or implied disclosures through introductions and communications.

Establishing a Working Framework

The “Working Agreement” aspect of an NCNDA sets behavioral boundaries for cooperation. It defines how parties conduct discussions, how they may use information, and which obligations continue even if negotiations do not result in a finalized transaction.

This framework creates commercial discipline and reduces the risk of opportunistic behavior during exploratory negotiations.

Consequences of Breach of a Non-Circumvention Non-Disclosure Agreement

An essential principle of an NCNDA is that if a party decides not to proceed with a business relationship, it must not exploit the information received. Any unauthorized use or disclosure constitutes a breach.

Consequences of breach may include:

• Claims for direct damages
• Claims for lost profits
• Contractual penalties or liquidated damages
• Injunctive relief to stop further misuse
• Arbitration or litigation under the governing law

In certain jurisdictions, deliberate misuse of confidential information may also trigger criminal liability, particularly when fraud or misrepresentation occurs.

Essential Terms to Include in an NCNDA

Non-Circumvention Clause

This clause must clearly prohibit any attempt to bypass the introducing party. It should extend to:

• Direct dealings
• Indirect dealings through affiliates or nominees
• Substitute intermediaries
• Structurally similar transactions designed to avoid payment or recognition

A narrowly drafted clause significantly weakens enforceability.

Non-Disclosure Clause

The confidentiality obligation should cover all non-public information exchanged during negotiations, including:

• Intellectual property
• Trade secrets
• Customer and supplier identities
• Contact details
• Communications and introductions

The clause should also specify permitted uses and exceptions.

Term and Duration

NCNDA duration must be carefully defined. Common structures include:

• A fixed term, such as five years from execution
• Expiration upon completion of a defined transaction
• Indefinite confidentiality obligations

In practice, parties often limit non-circumvention obligations by time, while confidentiality obligations continue indefinitely.

Parties Bound by the Agreement

The agreement should bind not only the signatories but also their:

• Affiliates
• Directors and officers
• Employees
• Agents and representatives
• Independent contractors

Each party should remain responsible for ensuring compliance by these associated persons.

Information Not Covered by an NCNDA

NCNDAs typically exclude information that:

• Was already known to the receiving party before disclosure
• Becomes publicly available without breach
• Is independently developed without reliance on confidential information

These exclusions must be narrowly drafted to avoid abuse.

Review and Customization

While standard NCNDA templates are widely used, they are rarely sufficient without modification. Jurisdiction, transaction type, industry norms, and the intermediary’s role all influence how the agreement should be structured.

Legal review is strongly recommended, especially for cross-border transactions, where enforceability, governing law, and dispute resolution mechanisms vary significantly.

Final Note

An NCNDA is not merely a formality. It is a critical risk-control instrument in international trade. When drafted precisely, it protects introductions, preserves confidential value, and reinforces trust. When poorly drafted, it provides only the illusion of protection. In intermediary-driven transactions, that difference can determine whether commercial value is preserved or lost.

You may also like to have a look at our:

• ICC Non-Circumvention & Non-Disclosure Agreement (NCNDA)
• Non-Disclosure Agreement (NDA) – Short form
• Business Plan Non-Disclosure Agreement (NDA)
• AI Non-Disclosure Agreement (AI-NDA)

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References:

• World Intellectual Property Organization (WIPO) – Protecting Confidential Information: Trade Secrets
• Investopedia – Non-Disclosure Agreement (NDA)