Introduction
In the highly competitive business environment, partnerships and deals often necessitate the sharing of contacts, proprietary information, and resources. However, the risk of exploitation or betrayal is an ever present concern. In this context, trust is paramount, serving as the essential foundation for successful business relationships. When parties enter into collaborations, it is crucial to establish safeguards to protect individual interests and ensure all promises are kept. A key tool for this purpose is a Non Circumvention Agreement (NCA).
This article explores the nature of a Non Circumvention Agreement and details how this legal instrument can help safeguard a business’s assets and relationships.
What is a Non Circumvention Agreement?
A Non Circumvention Agreement is a contractual agreement specifically designed to prevent parties from bypassing or circumventing one another in commercial transactions. Essentially, an NCA stops one party from directly engaging in business dealings with an individual, client, or company that was originally introduced to them by the other party. By executing an NCA, the signatories legally agree not to go behind each other’s back or directly deal with the contacts facilitated by the introductory party.
Non Circumvention Agreements are especially valuable in various commercial scenarios, including:
- Joint ventures
- Business partnerships
- Mergers and acquisitions
- Collaborations with external consultants or professionals
Illustrative Example
Consider a scenario where a business operates a high end tailoring enterprise in Nairobi, specializing in unique clothing designs, while a collaborator owns a dedicated sewing workshop proficient in garment finishing and stitching. The tailoring business observes a demand from its clientele for custom made clothes that require both creative design input and expert stitching. The two parties agree to a joint venture, where the tailoring business supplies the designs and the collaborator handles the production.
Once the collaborator gains access to the tailoring business’s client base and design specifications, the originating business would want assurance that the collaborator will not bypass them to offer direct stitching services to the clients without their participation. In this situation, a Non Circumvention Agreement offers essential protection, guaranteeing that the collaborator cannot cut the originating business out of the transaction and continue working with those clients independently.
Judicial Precedents and Enforceability in Kenya
Non circumvention clauses, which aim to prevent parties from avoiding an intermediary to deal directly with specific entities, are scrutinized for their reasonableness concerning their duration and geographic reach within Kenyan jurisprudence. While there is limited specific case law directly addressing non circumvention clauses, courts frequently draw comparisons with rulings on non compete clauses due to their shared underlying principles.
Under the Restraint of Trade Act (Cap 24, Laws of Kenya), a contract restraining a party from engaging in a lawful profession, trade, or business is not automatically void. Instead, it must be demonstrably reasonable in its time duration, geographical scope, and adherence to public interest.
The courts play a vital role in evaluating whether the terms of a restrictive clause, including non circumvention provisions, extend beyond what is necessary to protect legitimate business interests. Consequently, when drafting an NCA, it is imperative to ensure the clause is narrowly tailored to protect specific interests and does not excessively restrict the other party’s ability to conduct business. Should the agreement be challenged, the court will assess if the restraint is proportionate, fair, and justifiable under the circumstances.
Duration Time Limitation
Kenyan courts examine whether a restrictive clause’s time frame is reasonable and necessary to safeguard legitimate business interests. For instance, a court may rule that a 12 month non compete agreement is unenforceable if it unfairly limits the claimant’s employment options without providing sufficient protection for specific interests, such as trade secrets, as was observed in case law.
Geographical Scope Territorial Limitation
The enforceability of a restrictive clause is also significantly affected by its geographical restrictions. Clauses must not be overly general; they should precisely define the restricted area. For example, a court may deem a non compete agreement that restricts a former employee from engaging in similar business across the entire Kenyan territory for 12 months as too broad and therefore unenforceable, as demonstrated in pertinent legal rulings.
How Non Circumvention Agreements Protect Your Business
1. Preserving Business Relationships and Investments
NCAs function as a protective barrier, ensuring that the business relationships and investments cultivated by a party remain secure. In numerous transactions, one party is responsible for introducing potential clients, partners, or investors to another. Without an NCA, the risk of being sidelined once the introduction is completed is high. By legally obligating all parties to honor their commitments, NCAs prevent unfair practices and ensure that the facilitator of the business opportunity receives their rightful benefit.
2. Safeguarding Confidential Information
During negotiations or collaborations, businesses frequently share sensitive information, which can include client lists, trade secrets, financial records, and proprietary technology. NCAs offer an essential layer of protection by legally restricting how this information may be used or shared. Without such safeguards, a recipient party could exploit confidential data for their own financial benefit, potentially harming the disclosing business. By prohibiting circumvention, NCAs help maintain trust, secure valuable corporate information, and uphold professional integrity.
3. Ensuring Fair Play and Accountability
Trust is the bedrock of successful commercial dealings, and NCAs reinforce this by establishing clear expectations and responsibilities. These agreements define the rules of engagement, including explicit restrictions on bypassing the introductory party. By setting clear legal boundaries, NCAs discourage unethical behaviour, promote greater transparency, and foster a business environment where all parties can operate with confidence and fairness.
4. Reducing Risks and Preventing Legal Disputes
In the absence of an NCA, parties may seek to exploit ambiguities or contractual loopholes to bypass one another, which can lead to conflicts over commissions, profit shares, or the unauthorized use of confidential assets. Such disputes can escalate into expensive legal battles and cause considerable damage to a company’s reputation. An NCA serves as a preventive measure by explicitly outlining each party’s rights and obligations. Should a breach occur, the agreement provides a clear legal basis for resolving the conflict and enforcing penalties, thereby minimizing risks and protecting core business interests.
Conclusion
Businesses must acknowledge the inherent risks within partnerships and proactively take preventative measures to mitigate them. Moving forward in 2025, companies should prioritize the drafting and diligent enforcement of Non Circumvention Agreements in all dealings that involve shared contacts, business opportunities, or sensitive information. Furthermore, educating internal teams on the importance of these agreements ensures universal alignment in protecting the company’s interests.
While Non Circumvention Agreements are powerful instruments for protecting business relationships, their ultimate enforceability in Kenya is contingent upon how reasonably they are drafted, particularly regarding their duration and geographic scope. Kenyan courts are unlikely to uphold clauses that are deemed overly broad or restrictive and which unfairly limit a party’s freedom to trade or work.
This judicial perspective underscores the critical importance of tailoring NCAs to fit the specific context of each unique business dealing. A well drafted agreement must achieve a necessary balance between protecting legitimate commercial interests and respecting legal limitations to ensure its full enforceability.
