The Importance Of A Non-Circumvention Clause In Commercial Contracts

The Importance Of A Non-Circumvention Clause In Commercial Contracts

Many business owners, including experienced ones, might never have heard of a non-circumvention clause, however, if your commercial lawyers advise you to include one in any contract you create with your clients or customers, then we highly recommend that you follow their advice.

The reason for that is a non-circumvention clause can help to prevent damage to your business, including maintaining revenue levels and subsequently profits, especially if you are in a highly competitive market sector or location. As for what a non-circumvention clause is, how they are used within the commercial world, and their importance, then please read on and we will explain all.

Non-Circumvention Clauses Explained

The simplest explanation we can give you of a non-circumvention clause is that it places a restraint on another party which you are doing business with that prevents them from bypassing your business, and instead dealing with those companies and other entities which either supply you or provide a service for you.

A simple example would be a company that supplies local car repair companies with spare parts for cars. They could include a non-circumvention clause to prevent their clients from going directly to the manufacturing company which makes the car parts from which they purchase wholesale and then sell on a retail basis.