The Nondisclosure and Non-compete Agreements

Nondisclosure and Non-compete agreements are critical when you get to that point that significant disclosure of information about the operation of the web site under negotiation is eminent. And because you do not want to enter into this level of agreement with a large number of bidders, you will wait until that strategic moment when the negotiations are moving to that level to introduce these documents. For some focused examples of such documents that are specifically designed for the process of buying or selling a web site, the following this link can be of help…

The purpose of the nondisclosure agreement is pretty obvious. In this agreement each party agrees that whether the deal goes through or not to protect the trade secret information being disclosed for the purpose of the deal from being revealed to any outside parties. The agreement generally has a time frame of three to five years. It is a critical document, especially for the seller because much of the information we discussed above is confidential business data that is generally not released to the public. The buyer too has the seller sign a joint nondisclosure during this part of the discussions to assure that both parties are protected.

A non-compete agreement is just as important if not more so. For illustrative purposes we have provided an example non-compete agreement in the appendix. Please note that neither of these documents is provided to suggest that they are complete legal forms to be used as they are. Whether the reader is a buyer or seller or both, you should locate a non-compete and nondisclosure agreement that has been reviewed by your legal aid and is comprehensive to cover all of your needs during the web purchase transaction.

The non-compete document has a number of uses to protect each partner.

It can be used to assure that once confidential information begins to change hands under the protection of the nondisclosure agreement, that neither party to the negotiations will use the information disclosed to compete with the other party should the negotiations not end in a web site change of ownership from seller to buyer.

This is an important agreement particularly for the seller to protect him or her from an unscrupulous buyer who in actually never meant to purchase the web site but used the negotiation to conduct some “corporate espionage” to learn the inside secrets of your success and then bail out of the purchase and set up a clone of your site to steal your business.

It can also protect the seller in the event that you wish to protect your business concept which is not being traded in the web site sale. You may be selling the web site, its infrastructure and functionality on the premise that the buyer will set up a significantly different kind of business on that site so you can create a new web presence to continue your line of work. A non-compete can assure that your business concept and market niche remain protected.

Further you can use a non-compete agreement to protect your business relationships. You may have deals and business to business relationships that are unique to your business that you do not wish to see disrupted by a competitor or outside party. You can include those relationships in the non-compete to assure that your buyer does not take advantage of the disclosure of secure information to gain unfair advantage in the market place.

Securing these documents will go a long way toward helping you feel secure about who you are doing business with. But a certain amount of due diligence is also in order to assure yourself that you are doing business with a viable negotiating partner.