Bifurcating Corporate NNN Agreements and Individual PRC Labor Contracts
Corporate NNN agreements cannot bind individual PRC workers directly without compliant labor contract non-competes backed by monthly statutory stipends.
Non Circumvention Obligation
Meaning
Contractual transaction protection represents a binding agreement that prevents parties from bypassing each other to deal directly with suppliers or customers. This specific non circumvention obligation restricts intermediaries or buyers from using shared contacts to execute deals independently. The rule maintains the commercial position of the broker who introduced the parties.
Contractual Setup
Agreements containing a non circumvention obligation are signed during the early stages of supply chain discussions. The clause defines the protected parties and the specific duration of the restriction, which often runs for several years after the termination of the project. It outlines the consequences of unauthorized contact with factory managers or raw material suppliers.
Multinational buyers often sign these to reassure local sourcing agents that their brokerage fees are secure.
Breach Liability
Violation of these terms can lead to large damage claims if the bypassed party can prove a direct loss of commission or revenue. Courts evaluate the communication records and purchase orders to determine if direct transactions occurred during the restriction period. The breaching party might have to pay a pre-agreed liquidated damage amount or return any profits made from the direct deal.
Enforcing this requires clear evidence of the connection between the introduction and the subsequent contract.
Remedial Resource
Securing remedies in domestic courts requires clear evidence that the bypass occurred within the territorial jurisdiction. Sourcing agents can use injunctions to stop unauthorized transactions or demand audits of the supplier’s shipment records. Having a clear dispute resolution clause that points to a specific arbitration center improves the chances of a successful claim.
The supplier must also be bound by similar terms to make the overall protection effective.