Florida has always been a good state for business, offering several advantages to companies established in the region. Unlike other states, Florida allows entrepreneurs and business owners to utilize restrictive covenants to protect their legitimate business interests.
Many employers utilize non-compete agreements and non-disclosure agreements to safeguard trading secrets, confidential information and business lists from ex-employees.
Furthermore, business owners in Florida can rely on non-circumvention agreements, as they serve to ensure compensation for business opportunities presented to other companies.
In this article, we provide you a full guide on non-circumvention agreements in Florida.
What Is a Non-Circumvention Agreement?
Also referred to as a confidentiality agreement, a non-circumvention is a legally binding contract between two or more parties involved in a business relationship which aims to prevent one or more parties from being passed over in a transaction, leaving them without full compensation for their contribution.
It is not uncanny to find situations in which one or more parties involved in a business venture (e.g., an agreement signed by several contractors involved in the construction of a building) are bypassed, or circumvented, despite their labor or involvement.
In this sense, non-circumvention agreements are typically utilized in cases where two companies operating in the same industry (e.g., real estate) provide each other with business opportunities.
In terms of purpose, non-circumvention agreements share some similarities with non-compete agreements, such as protecting business contacts and other proprietary information.
Besides, by signing a non-circumvention agreement, the protected parties safeguard themselves from being cut out by the restricted parties from their dealings.
How the Parties Involved in a Business Relationship Are Affected by Non-Circumvention Agreements?
Typically, the existence of any downsides of non-circumvention agreements is felt by the party (or parties) being restricted. An agreement containing overly restrictive clauses may lead restricted parties to potential losses in terms of future business opportunities.
However, in most cases, both parties (restricted and protected) share the benefits of signing a non-circumvention. All parties enjoy the fact that any sensitive business information and contacts are under legal protection, being used only for specific purposes under the threat of a lawsuit.
Plus, restricted parties can rely on the fact that, without signing the non-circumvention agreement, the protected party could not have provided the business opportunity.
Non-Circumvention Agreement in Florida- Real World Example
To illustrate how a non-circumvention agreement works in the real world, let us say there is a business specialized in auto repair located in Fort Lauderdale, FL.
The auto repair company called (A) has been operating for 20 years straight with ten employees and a huge list of clients, suppliers, and strategic business partners.
Given the fact that the (A) company is specialized in vehicle maintenance and general auto repair, many customers started to ask for customizations and other detailing on their vehicles.
Hence, as the (A) company does not provide these types of services, the owner decided to make a partnership with another auto repair shop specialized in vehicle customization and detailing located in the same street.
Both business parties, in this case, auto repair shop (A) and auto repair shop (B), opted for not signing any type of restrictive covenant, due to the existence of a friendship between the owners of the two businesses.
Over time, the (A) company has been referring customers to the auto repair shop (B) almost on daily basis. Nonetheless, after a few months, the owner of the (A) company notices that some regular customers simply disappeared and never came back.
Suddenly, what he discovers is that his “friend”, who owns the auto repair shop (B), has expanded his range of services and now offers the same services (vehicle maintenance and general auto repair).
Accordingly, the other party took advantage of the references made by the (A) company and “stole” some of the (A) company’s customers.
This type of situation shows how useful non-circumvention agreements can be to protect the legitimate interest of entrepreneurs in Florida.
Drafting a Non-Circumvention Agreement
We strongly recommend that entrepreneurs and business owners do not rely on sample forms or templates containing pre-defined clauses when drafting a non-circumvention agreement in Florida.
Instead, the best approach is to seek guidance from an expert business attorney to tailor a non-circumvention agreement that will suit your specific circumstances and protect your legitimate business interests.
Non Circumvention Agreement Florida – We Can Help You
At Jurado & Farshchian, P.L., we have attorneys that will help you utilize non-circumvention agreements the right way. If you need help to safeguard your business legally, do not waste time with uncertainty.