As the novel coronavirus spreads around the world, a chaotic market for N95/KN95 masks, Personal Protective Equipment (“PPE”) such as gloves, thermometers, ventilators, hospital beds, testing kits, hazmat suits, hand sanitizer, goggles and other desperately sought-after medical supplies vital to the fight against COVID-19 has sprung up.
Numerous brokers or businesses around the world have joined the gold rush for this year’s most sought-after commodities. Urgent late-night inspections at mask factories, hurried million-dollar wire transfers to secure PPEs, and more. In this frenzied, pandemic-driven market, many different types of commercial agreements are involved. Entrepreneurs in international commodity trading, especially bulk commodities, often come across documents like Non-circumvention, Non-disclosure Agreements (“NCNDA”), International Master Fee Protection Agreement (“IMFPA”), Commission Agreements, and other documents. However, the legitimacy and protection these documents afford are yet to be determined.
What are NCNDAs and Why You Should Consult an Attorney Before Signing One
An NCNDA is an agreement that is commonly used in the preliminary stages of a business transaction where the seller and buyer do not know each other but are brought into contact with each other by one or more intermediaries or brokers to fulfill the transaction. The purpose of such agreement is to ensure that (1) the intermediaries or brokers who brought the buyer and seller together are not by-passed and (2) the information disclosed during the negotiations is not revealed to any external or unauthorized party. These agreements are usually valid for a specified term.
In this frenzied market, as the manufacturers making these desperately sought-after medical supplies are making huge profits by supplying bulk commodities to whoever can pay the most and pay fastest, a strong and well-drafted NCNDA is vital to anyone involved in these deals to protect their interests and ensure that they are not circumvented.
Some key terms of an NCNDA include:
- Non-Circumvention Clause, which is used to prevent the contracting parties from cutting each other on any businesses covered in the agreement. A clear definition of the covered business is critical.
- Non-Disclosure Clause, which aims to protect any information the contracting parties intend to be held confidential. A good NCNDA will need clear language to ensure important information that the party wants to prevent from disclosure are covered.
- Term, which defines how long the NCNDA will run.
Navigating this chaotic, “Wild West” PPE market can seem daunting. It is always helpful to enlist the assistance of a professional business attorney. At Carbon Law Group, with our extensive experience in providing legal guidance to businesses in contracting and negotiation, we are confident that we can serve as strong legal support for your business. Find out how Carbon Law Group can help you protect your intellectual property rights by scheduling a meeting with us using this link.
We can help with:
- Reviewing Contracts
- Drafting strong NDAs and Non-circumvent Agreements
- Answering compliance questions
- Due Diligence
- Paymaster Services
Judy Yen is an associate in Carbon Law Group’s Los Angeles office. She joined our firm in 2019 and her practice focuses on representing emerging companies in intellectual property and business transactional matters.
Born and raised in Taiwan, Judy is a native speaker of Mandarin Chinese. She has used her international legal experience, language, and bicultural skills to represent businesses and investors from the Greater China region in cross-border business expansion plans and execution in investing in the United States. Prior to joining Carbon Law Group, Judy worked for Paul Hastings LLP in their Shanghai office, where she gained valuable experience in international corporate law, including working on two IPO projects.
Judy is admitted to practice law in California. She graduated from Loyola Law School, Los Angeles in May 2019. In law school, Judy was a member of the Fashion Law Clinic, Transactional Negotiation Team and Entertainment Moot Court. She received her bachelor’s degree in Political Science and Accounting from the University of California, Los Angeles.
Judy grew up in a family of artists and entrepreneurs who had fostered her passion for art and business. She is an avid foodie who loves to both explore cool restaurants and try new recipes at home. She also likes oil painting, swimming, and hiking.