In business, seeking the aid of other businesses to fulfill vital services on your behalf keeps your operation up and running. However, forming ties with other entities requires you to share your trade secrets with them, putting you at risk of an information leak that might give your competitors an advantage over you. A vendor non-compete agreement provides you with safeguards to keep this from happening. Read more below to find out why.

FREE 9+ Vendor Non-Compete Agreement Samples

1. Vendor Non Compete Agreement Template

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2. Vendor Non-Compete & Non-Solicitation Agreement

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3. Sample Mutual Non-Compete Agreement

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4. Sub Vendor Non-Compete Agreement

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5. General Non-Compete Agreement

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6. Non-Compete Agreement Form

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7. Vendor Non-Compete Agreement Guide

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8. Sample Vendor Non-Compete Agreement

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9. Business Non-Compete Agreement

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10. Printable Non-Compete Agreement

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What Is a Vendor Non-Compete Agreement?

A vendor non-compete agreement prevents a business’s vendors from serving or transacting any of the brand’s direct competitors. A business’s supplier gains access to a small portion of a company’s vital trade information. Implementing a non-competition rule assures the business that its partners in the industry won’t disclose any details of their transactions to neighboring competitors and threaten their security in the market.

Why Use a Non-Compete Agreement

A non-compete agreement is not only useful in protecting the business trade secrets with a vendor, but it’s also helpful when hiring new addition to a company’s human resources. An employee non-compete agreement is often a clause or an attachment to employment agreements. No one ever gets close to the company’s operational plan and important information other than the people working under its roof. According to The Balance Careers, among the significance of an employee non-compete agreement is it lessens turnovers and keeps the employees from using the skills they learned from the company and taking it elsewhere.

In vendor non-compete agreements, the advantage of having this on your transactions is making your partners feel safe. They know you’ll be extending the same secrecy for their private information and business goal plans. It also keeps your competitors from snatching your assets against you. A good business partner is huge leverage for your company. The non-compete agreement will give you exclusive rights to experience quality service and eliminate the risk of other companies luring them in with a bigger offer.

How to Write a Vendor Non-Compete Agreement

Here are some tips that you can use when making a vendor non-compete agreement:

1. Examine Your Purpose

Before you write the draft of your non-compete agreement, start by determining your purpose for the task. Why do you need a non-compete agreement? Do you need your suppliers to be exclusive to you? Would it harm your business if your vendors extend their services to other companies in a similar field? Suppose your purpose is to unreasonably prevent your partners from seeking other opportunities and not to safeguard your brand’s trade secrets, confidential issues, and other serious matters. In that case, this document can work against you in court. Make sure that your purpose protects you and your business partner’s interest.

2. State the Scope of the Agreement

Based on your purpose or objective in making this agreement, identify what terms you need to include in your agreement. This will outline all restrictions and the things your vendor needs to remember when doing business with you. This should clarify if you’re not allowing your vendors to transact with your direct competitors only. This should also spell what kind of trades or businesses they should deter from getting involved with until your business agreement expires. Remember to keep this clause detailed and simple, so it’ll be easier for them to read and interpret. Avoid using unfamiliar terminologies and employ basic language.

3. Specify the Term Duration

Define how long you’re imposing the vendor non-compete rule an include it on your document. This usually occurs six months after the agreement has reached its limits. This is to assure the business that their partner won’t side with a competing enterprise and right after their transaction closes. There’s always the risk of disclosing private information shared during their dealings. Specify the timeline and be reasonable. If you exceed the average period and extend for up to several years, your agreement won’t be enforceable. 

4. Explain the Breach Consequences

Include what consequences they may face when they choose to breach your agreement’s terms deliberately. In most cases, you may demand a fine for breaching the terms. You may also take legal action against them when proven that they were able to do more than join another transaction and breached the non-disclosure agreement of keeping your business’ details and dealings confidential. This gives your agreement a certain implementing power when paired with what the outcome may be when the party refuses to adhere to thee written terms.

FAQs

Can the company deny you the job offer when you refuse to sign a non-compete agreement?

Yes, the company can retract their offer if you refuse to sign a non-compete agreement.

Can you terminate a non-compete agreement?

If it meets all the standards of a reasonable and enforceable non-compete agreement, then no. However, if it fails to meet the requirements, you can argue about it in court or negotiate with your former employer.

What are the other restrictive covenants aside from the non-compete agreement?

The other restrictive covenants are non-solicitation agreements and non-disclosure agreements.

Keeping your interests safe while dealing with other people should be among your priorities when doing business. The business field is an arena full of fierce competitions. Every company is spending a huge chunk of its resources and strategizing their plan of keeping themselves relevant in the competition. Making connections with other names in the industry makes you vulnerable to the threat of exposing your assets. The non-compete agreement will safeguard you from this. Go through our non-compete agreement templates and get one for your business’s use. Download now!

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