Legal Question in Business Law in Georgia

Is it Proper to include NonSolicitation Clause in a Non-Disclosure Agreement

If two parties are signing a Non-Disclosure Agreement (where both entities are manufacturer's of different product lines but share the same customer base and have the capability of producing the others products) would it be appropriate to include a NonSolicitation provision protecting each entity from the other from knowingly soliciting each other's suppliers, representatives, agents etc for competitive purposes.

This is a 'David & Goliath' situation where Company A (Goliath) is supposedly interested in marketing a product developed by Company B (David) in which Company B has spent numerous years developing and refining a product that is just now starting to gain interest and market acceptance. Company A wants to offer the Product (of Company B) within a defined market segment or group of customers where Company A already has established long term relationships. Company B has worked very hard to get the costs extremely low through years of strategies and negotiating etc with its suppliers etc..


Asked on 11/12/02, 5:36 pm

1 Answer from Attorneys
Jeff Kent Kent & Merritt, P.A.

Re: Is it Proper to include NonSolicitation Clause in a Non-Disclosure Agreement

Since it is not completely clear from your post exactly what you want to protect, this response is fairly general. If you have more specific questions please feel free to contact me or your own attorney. That being said, you should continue looking at this situation from a business and competitive perspective. From your post, it appears that both companies stand to gain by entering into an agreement to market products. Like any contract, this agreement may contain whatever terms to which the parties agree, as long as the terms are legal. A non-solicitation clause, if properly drafted, is legal in Georgia and most other states. Many contracts that I have seen similar to what you describe have either unilateral or mutual non-solicitation clauses. It is only a question of whether both sides can agree to the clause. Another thing you might want to consider is an exclusive or non-exclusive territory clause, where Company A is authorized to sell Company B's products only within a specified territory, on an exclusive or non-exclusive basis. If Company B's sales efforts are in other territories, this might offer some protection to Company B.

The foregoing is general information only, not specific legal advice. No attorney/client relationship has been created or should be implied. Consult with an attorney before taking legal action.

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Answered on 11/13/02, 7:00 am


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