What is the difference between non-disclosure, non-compete and non-solicitation clauses?

A non-disclosure clause prohibits the disclosure of confidential information to third parties, a non-compete clause prohibits specific activities that compete with a business and a non-solicitation clause prohibits solicitation of a business's customers, employees or similar business relationships.

Also note that a non-circumvent clause is a similar term often appearing within non-disclosure agreements where one party is receiving confidential information related to a potential business transaction. The clause prohibits the recipient from pursuing or carrying out the transaction without the disclosing party's prior written consent. It also often prohibits the recipient from contacting other interested parties to the transaction. Essentially, this means the recipient may not cut the disclosing party out of the deal by attempting to transact with the other parties to the deal directly.

All of these terms commonly appear in business contracts and human resources forms, often in the same document. The clauses normally specify for how long and to which parties to the agreement they apply.


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