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Non-Circumvention Agreement (Canada)

Non-Circumvention Agreement (Canada)

This Non-Circumvention Agreement (the "Agreement") is made and entered into as of [Effective Date] (the "Effective Date"), by and between the following parties:

[Party A Name], [Party A Type], with a principal address at [Party A Address], [Party A City], [Party A Province] [Party A Postal Code], Canada, email: [Party A Email], phone: [Party A Phone] (hereinafter referred to as "Party A" or the "Disclosing Party"); and

[Party B Name], [Party B Type], with a principal address at [Party B Address], [Party B City], [Party B Province] [Party B Postal Code], Canada, email: [Party B Email], phone: [Party B Phone] (hereinafter referred to as "Party B" or the "Receiving Party").

Party A and Party B may each be referred to individually as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, the Parties wish to engage in business discussions and potential transactions for the purpose of: [Business Purpose] (the "Business Purpose");

WHEREAS, in the course of pursuing the Business Purpose, one or both Parties may introduce the other to certain business contacts, relationships, clients, suppliers, investors, or other third parties (collectively, the "Introduced Contacts"), including: [Protected Contacts];

WHEREAS, one or both Parties may disclose confidential and proprietary information to the other Party, and each Party wishes to protect its business relationships, trade connections, and confidential information from circumvention;

WHEREAS, the Parties acknowledge that non-circumvention provisions are subject to the principles of reasonableness as established by the Supreme Court of Canada in Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6, and the common law requirements for enforceability of restrictive covenants, including reasonable scope, duration, and geographic limitation;

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. NON-CIRCUMVENTION OBLIGATIONS

1.1 Each Party agrees that it shall not, directly or indirectly, circumvent, avoid, bypass, or attempt to circumvent the other Party in order to contact, deal with, transact business with, or enter into any arrangement or agreement with any Introduced Contact, without the prior written consent of the introducing Party.

1.2 Without limiting the generality of Section 1.1, neither Party shall: (a) initiate or engage in any business transaction with an Introduced Contact without the express written permission of the introducing Party; (b) disclose the identity or contact information of any Introduced Contact to any third party; (c) use any confidential information obtained through the introducing Party to contact or do business with an Introduced Contact; or (d) assist any third party in circumventing the introducing Party's relationship with an Introduced Contact.

1.3 The non-circumvention obligations set out in this Section shall apply within [Geographic Scope] for a period of [Agreement Duration].

1.4 This restriction shall not apply to contacts or relationships that a Party can demonstrate, by clear written evidence, existed prior to the Effective Date of this Agreement.

2. CONFIDENTIAL INFORMATION

2.1 "Confidential Information" means any and all non-public information, whether written, oral, electronic, or in any other form, disclosed by one Party to the other in connection with the Business Purpose, including but not limited to: [Confidential Info].

2.2 Each Party agrees to: (a) hold all Confidential Information in strict confidence; (b) not disclose Confidential Information to any third party without the prior written consent of the disclosing Party; (c) use Confidential Information solely for the Business Purpose; and (d) take all reasonable steps to protect the Confidential Information from unauthorized disclosure or use, using no less than the same degree of care it uses to protect its own confidential information.

2.3 Confidential Information does not include information that: (a) was already known to the receiving Party prior to disclosure; (b) is or becomes publicly available through no fault of the receiving Party; (c) is independently developed by the receiving Party without reference to the Confidential Information; or (d) is lawfully obtained from a third party without breach of any confidentiality obligation.

2.4 The confidentiality obligations under this Section shall survive for [Confidentiality Duration].

3. NON-DISCLOSURE

3.1 Each Party shall limit access to the Confidential Information to those employees, contractors, or professional advisors who have a legitimate need to access it for the Business Purpose and who are bound by confidentiality obligations no less restrictive than those set forth in this Agreement.

3.2 Each Party shall notify the other Party promptly in writing of any unauthorized disclosure, use, or access to the Confidential Information of which it becomes aware.

3.3 Notwithstanding the foregoing, a Party may disclose Confidential Information if required by law, court order, or governmental or regulatory order or direction. In such event, the disclosing Party shall provide prompt written notice to the other Party and cooperate to obtain a protective order or other appropriate remedy.

4. RETURN OR DESTRUCTION OF INFORMATION

4.1 Upon written request by the disclosing Party, or upon termination or expiry of this Agreement, the receiving Party shall promptly return or destroy all Confidential Information in its possession, including all copies, notes, summaries, and extracts thereof, and shall certify in writing that it has done so.

4.2 The receiving Party may retain copies of Confidential Information as required by applicable law or for regulatory compliance purposes. Any retained information shall remain subject to the confidentiality obligations of this Agreement.

5. TERM AND TERMINATION

5.1 This Agreement shall commence on the Effective Date and shall remain in effect for [Agreement Duration].

5.2 Either Party may terminate this Agreement at any time with ninety (90) days prior written notice to the other Party. Termination shall not affect any rights or obligations that have accrued prior to the effective date of termination.

5.3 The non-circumvention, confidentiality, non-disclosure, and remedies provisions of this Agreement shall survive termination or expiry for their respective stated durations.

6. REMEDIES

6.1 The Parties acknowledge that a breach of this Agreement may cause irreparable harm to the non-breaching Party for which monetary damages alone would be an inadequate remedy. Accordingly, in addition to any other remedies available at law or in equity, the non-breaching Party shall be entitled to seek injunctive relief, specific performance, or other equitable remedies from a court of competent jurisdiction, without the necessity of proving actual damages or posting a bond, to the extent permitted by the laws of the governing province.

6.2 The right to seek injunctive relief shall be in addition to, and not in lieu of, any other rights or remedies available to the non-breaching Party, including the right to recover monetary damages, lost profits, and reasonable legal fees and disbursements.

7. REASONABLENESS OF RESTRICTIONS

7.1 The Parties acknowledge and agree that the scope, duration, and geographic limitations of the restrictive covenants contained in this Agreement are reasonable and necessary to protect the legitimate business interests of each Party, including proprietary business relationships, trade connections, and confidential information.

7.2 In the event that any provision of this Agreement is found by a court of competent jurisdiction to be unreasonable in scope, duration, or geographic limitation, the Parties agree that such provision shall be modified by the court to the minimum extent necessary to render it enforceable, in accordance with the blue-pencil severance doctrine as applied by Canadian courts (Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6).

8. NO PARTNERSHIP OR AGENCY

8.1 Nothing in this Agreement shall be construed as creating a partnership, joint venture, agency, or employment relationship between the Parties. Neither Party has the authority to bind the other Party or incur obligations on the other Party's behalf without express written authorization.

9. COMPETITION ACT COMPLIANCE

9.1 Nothing in this Agreement is intended to, nor shall it be construed to, restrict competition or constitute an agreement to fix prices, allocate markets, or otherwise contravene Part VI (Offences in Relation to Competition) or Part VIII (Matters Reviewable by Tribunal) of the Competition Act (R.S.C., 1985, c. C-34). Each Party remains free to compete independently in any market.

10. DISPUTE RESOLUTION

10.1 Any dispute, controversy, or claim arising out of or relating to this Agreement shall be resolved by [Dispute Resolution].

10.2 Notwithstanding the foregoing, either Party may seek injunctive or other equitable relief from the courts at any time without first resorting to the dispute resolution procedure set out above.

10.3 Each Party shall bear its own legal costs unless the arbitrator or court awards costs in accordance with applicable provincial rules.

11. GOVERNING LAW

11.1 This Agreement shall be governed by and construed in accordance with the laws of the Province of [Province] and the applicable federal laws of Canada, without regard to conflict of laws principles.

11.2 The Parties attorn to the exclusive jurisdiction of the courts of the Province of [Province] for any proceedings arising out of or relating to this Agreement.

12. ASSIGNMENT

Neither Party may assign or transfer this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Any attempted assignment without such consent shall be void and of no effect.

13. SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such invalidity shall not affect any other provision, and the remaining provisions shall continue in full force and effect. The invalid provision shall, to the extent permitted by law, be replaced with a valid provision that most closely reflects the original intent of the Parties.

14. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, understandings, representations, and agreements between the Parties, whether written or oral. This Agreement may not be amended except by a written instrument executed by both Parties.

15. WAIVER

The failure of either Party to enforce any provision of this Agreement shall not constitute a waiver of that Party's right to enforce that provision or any other provision in the future.

16. NOTICES

All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed duly given when: (a) delivered personally; (b) sent by registered mail, postage prepaid, through Canada Post or equivalent postal service; (c) sent by nationally recognised courier service; or (d) sent by email with confirmation of receipt, to the addresses set forth above or to such other address as either Party may designate in writing.

IN WITNESS WHEREOF, the Parties have executed this Non-Circumvention Agreement as of the Effective Date first written above.

Party A (Disclosing Party)

________________

Signature

Date: ________________

Party B (Receiving Party)

________________

Signature

Date: ________________

Maintained by Vladislav Sergienko, Founder·Template last modified: ·Report an error

What Is a Non-Circumvention Agreement (Canada)?

A Non-Circumvention Agreement in Canada prevents a party from bypassing the other to deal directly with introduced contacts, protecting the originator’s commercial interest, governed primarily by common-law contract principles.

Non-circumvention agreements are treated as restrictive covenants under Canadian common law, which means they are subject to the same enforceability framework that applies to non-compete and non-solicitation agreements. The Supreme Court of Canada's landmark decision in Shafron v. KRG Insurance Brokers (2009 SCC 6) established that restrictive covenants must be clear, unambiguous, and reasonable in scope, duration, and geographic limitation. Courts will not use notional severance to rewrite vague or overly broad terms — if the restriction is ambiguous, it is unenforceable in its entirety.

The agreement must also comply with the Competition Act 1985 (R.S.C. 1985, c. C-34), which prohibits agreements that unduly restrict competition, fix prices, or allocate markets under Section 45 and Section 90.1. A non-circumvention agreement between competitors must be carefully drafted to protect legitimate business relationships without constituting market allocation or customer division prohibited under Part VI of the Competition Act 1985, enforced by the Competition Bureau.

Canadian courts have recognized that the diversion of business contacts can constitute irreparable harm justifying injunctive relief under RJR-MacDonald Inc. v. Canada (Attorney General) (1994 1 SCR 311). To obtain an interim injunction, the aggrieved party must demonstrate a serious issue to be tried, that damages would be an inadequate remedy, and that the balance of convenience favours granting the injunction. The Ontario Superior Court of Justice, BC Supreme Court, and Alberta Court of King's Bench all apply this three-part test. In Quebec, parties may also rely on the Civil Code of Quebec 1991 (CQLR c. CCQ-1991), articles 1375 and 2089, regarding obligations of good faith and restrictive covenants. The Personal Information Protection and Electronic Documents Act 2000, enforced by the Office of the Privacy Commissioner of Canada (OPC), governs any personal information about contacts shared under the agreement. Section 5 of the Personal Information Protection and Electronic Documents Act 2000 sets out accountability and consent requirements. Canadian professionals in sectors regulated by the Ontario Securities Commission (OSC) or British Columbia Securities Commission (BCSC) should confirm the agreement does not inadvertently restrict their professional obligations.

When Do You Need a Non-Circumvention Agreement (Canada)?

When introducing a business contact, client, or supplier to a partner, agent, or intermediary, and the introducing party needs assurance that the other party will not bypass them to deal directly with the contact in future transactions.

When engaging a broker, finder, or intermediary to source deals, investments, or business opportunities, and the principal needs protection against the intermediary cutting them out of transactions with contacts they provided.

When forming a joint venture or strategic alliance where each party brings proprietary business relationships to the table, and both need assurance that their contacts will not be poached by the other party after the venture concludes.

When sharing a proprietary client list or supplier network with a distributor, sales agent, or marketing partner, and the disclosing party needs contractual protection against direct dealing.

When entering international trade arrangements where one party introduces the other to overseas buyers, manufacturers, or distributors, and the introducing party needs protection in a jurisdiction where enforcement may be more challenging.

Without a non-circumvention agreement, the introducing party has no contractual remedy when their business contacts are approached directly, and common law claims for unjust enrichment or breach of fiduciary duty are difficult and expensive to prove before the Ontario Superior Court of Justice or BC Supreme Court. The Competition Act 1985 (R.S.C. 1985, c. C-34), enforced by the Competition Bureau, prohibits market-allocation arrangements under Section 45, so the agreement must be drafted to protect legitimate business relationships without contravening Part VI of the Competition Act 1985. Where the agreement involves sharing personal information about contacts, the Personal Information Protection and Electronic Documents Act 2000, enforced by the Office of the Privacy Commissioner of Canada (OPC), applies. Section 5 of the Personal Information Protection and Electronic Documents Act 2000 sets out consent and accountability requirements. In Quebec, parties may also rely on the Civil Code of Quebec 1991 (CQLR c. CCQ-1991), article 1375 (obligation of good faith in contracts) and article 1457 (extracontractual liability), to support non-circumvention claims. The Canada Revenue Agency (CRA) may also require that finder's fees or referral commissions paid under the agreement be reported as income under the Income Tax Act 1985.

What to Include in Your Non-Circumvention Agreement (Canada)

Identification of Protected Contacts — A clear description or list of the specific business contacts, clients, suppliers, or opportunities covered by the agreement. Under Shafron v. KRG, vague descriptions of the protected scope will render the covenant unenforceable. The more precisely the contacts are identified, the stronger the protection. Definition of Circumvention — An explicit statement of what constitutes circumvention: directly or indirectly contacting, soliciting, transacting with, or entering into any business arrangement with protected contacts without the introducing party's written consent. Reasonable Duration — A time-limited restriction, typically two to five years for commercial arrangements. Canadian courts are more likely to enforce restrictions that are proportionate to the legitimate business interest being protected. Indefinite restrictions face a higher risk of being struck down. Geographic Scope — If applicable, define the geographic territory covered by the non-circumvention obligation. For industry-specific or relationship-specific agreements, geographic limitations may be less relevant than specifying the protected contacts themselves. Competition Act Compliance — A provision confirming the agreement does not constitute market allocation, customer division, or restraint of trade prohibited under Part VI of the Competition Act. This is particularly important when the parties are actual or potential competitors. Compensation and Damages — The method for calculating damages if circumvention occurs, such as a percentage of the transaction value, lost commission, or liquidated damages. Liquidated damages clauses must represent a genuine pre-estimate of loss to be enforceable in Canada. Injunctive Relief — A clause acknowledging that circumvention may cause irreparable harm not adequately compensable by monetary damages, entitling the aggrieved party to seek injunctive relief. This clause is critical because business relationship damage is often irreversible. Governing Law — The province whose laws govern the agreement, which determines the applicable reasonableness standard and the court with jurisdiction over enforcement proceedings. The Ontario Superior Court of Justice, BC Supreme Court, and Alberta Court of King's Bench apply Shafron v. KRG Insurance Brokers (2009 SCC 6) when assessing enforceability. In Quebec, the Civil Code of Quebec 1991 (CQLR c. CCQ-1991), article 2089, governs restrictive covenants in employment; article 1375 imposes a general duty of good faith in commercial contracts. The Competition Act 1985 (R.S.C. 1985, c. C-34), enforced by the Competition Bureau, applies to commercial non-circumvention obligations throughout Canada. Section 45 of the Competition Act 1985 criminalises market-allocation agreements between competitors; Section 90.1 of the Competition Act 1985 provides civil review of agreements that substantially lessen competition. Privacy Compliance — Personal information about business contacts shared under the agreement is governed by the Personal Information Protection and Electronic Documents Act 2000, enforced by the Office of the Privacy Commissioner of Canada (OPC). Section 5 of the Personal Information Protection and Electronic Documents Act 2000 sets out accountability principles. Alberta's Personal Information Protection Act 2003, British Columbia's Personal Information Protection Act 2003, and Quebec's Act respecting the protection of personal information 2021 (Loi 25) apply provincially. The Federal Court of Canada has jurisdiction over privacy disputes involving federally regulated industries under the Federal Courts Act 1985. Forms-legal.com provides this template as a starting point for Canada-compliant documentation.

Sources & Citations

Statutory citations link to official government sources.

  1. R.S.C. 1985, c. C-34CA official

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Reference this free template in an article, syllabus, or research note:

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Forms Legal. (2026). Non-Circumvention Agreement (Canada) (Canada) [Legal document template]. Forms Legal. https://forms-legal.com/canada/business/contracts/non-circumvention-agreement-canada

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@misc{formslegal-non-circumvention-agreement-canada,
  author       = {{Forms Legal}},
  title        = {Non-Circumvention Agreement (Canada) (Canada)},
  year         = {2026},
  howpublished = {\url{https://forms-legal.com/canada/business/contracts/non-circumvention-agreement-canada}},
  note         = {Free legal document template. Based on Common law of contract}
}

Frequently Asked Questions

Based on Common law of contract — Template last modified June 2026

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