Negative covenant clause: Copy, customize, and use instantly
Introduction
A negative covenant clause is a provision in a contract that restricts a party from engaging in certain actions or activities. This clause serves to protect the interests of the other party by limiting certain behaviors that could negatively affect the business, financial situation, or strategic position of the other party. It is designed to prevent actions that would be harmful or contrary to the purpose of the agreement.
Below are templates for negative covenant clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard negative covenant clause
This version provides a general framework for negative covenants.
The Party agrees that, for the duration of this Agreement, they will not engage in any activities or conduct that directly competes with [Party A] in [specific market or industry] without the prior written consent of [Party A]. This includes, but is not limited to, launching or investing in businesses or projects that directly compete with [Party A].
Negative covenant clause with provision for non-compete
This version includes a non-compete obligation.
The Party agrees that, during the term of this Agreement and for a period of [X] years following its termination, they will not, directly or indirectly, participate in or engage with any business or entity that competes with [Party A] in [specific market or region].
Negative covenant clause with provision for no solicitation of employees
This clause limits solicitation of employees.
The Party agrees that, for a period of [X] years following the termination of this Agreement, they will not solicit or attempt to hire any employees, contractors, or consultants who were employed by [Party A] during the term of this Agreement, without [Party A]’s prior written consent.
Negative covenant clause with provision for no disclosure of confidential information
This version addresses confidential information.
The Party agrees that they will not, during the term of this Agreement and for [X] years after its termination, disclose or use any confidential information or trade secrets belonging to [Party A] for any purpose other than as expressly authorized in this Agreement.
Negative covenant clause with provision for no financial interest in competing businesses
This version prohibits financial interest in competing businesses.
The Party agrees that, for the duration of this Agreement and for a period of [X] years following its termination, they will not acquire, hold, or invest in any financial interest in any business that competes with [Party A] in [specific market or industry].
Negative covenant clause with provision for no acquisition of similar businesses
This version restricts the acquisition of similar businesses.
The Party agrees that, for the term of this Agreement and for [X] years thereafter, they will not, without prior written consent from [Party A], acquire, merge with, or invest in any business that competes directly with [Party A] or operates in a similar industry.
Negative covenant clause with provision for no diversion of business opportunities
This clause limits the diversion of business opportunities.
The Party agrees not to divert or attempt to divert any business opportunities, leads, or clients that were introduced to them by [Party A] during the term of this Agreement. This restriction applies during the term and for [X] years following termination.
Negative covenant clause with provision for no use of proprietary assets
This version restricts the use of proprietary assets.
The Party agrees not to use, for their own benefit or the benefit of a third party, any proprietary assets or intellectual property belonging to [Party A] during the term of this Agreement and for [X] years following termination.
Negative covenant clause with provision for no establishment of competing entities
This version prevents the establishment of competing entities.
The Party agrees that they will not establish, form, or become involved with any entity that directly competes with [Party A] in [specified market or geographic area] for the duration of this Agreement and for [X] years following its termination.
Negative covenant clause with provision for no solicitation of customers
This clause addresses the solicitation of customers.
The Party agrees not to solicit, directly or indirectly, any customers or clients of [Party A] with whom they had direct contact during the term of this Agreement, for a period of [X] years after termination of this Agreement.
Negative covenant clause with provision for no interference with contractual relationships
This version restricts interference with contractual relationships.
The Party agrees that they will not, during the term of this Agreement and for [X] years thereafter, directly or indirectly interfere with, or attempt to disrupt, any contracts, agreements, or relationships between [Party A] and its clients, vendors, or partners.
Negative covenant clause with provision for no creation of competing marketing campaigns
This clause restricts creating competing marketing campaigns.
The Party agrees not to create, sponsor, or implement any marketing campaigns or materials that directly compete with [Party A]’s marketing efforts in [specific market or product category] during the term of this Agreement and for [X] years after termination.
Negative covenant clause with provision for no use of trade secrets
This version restricts the use of trade secrets.
The Party agrees not to use or disclose any trade secrets or confidential business information learned from [Party A] during the term of this Agreement for a period of [X] years after the termination of this Agreement.
Negative covenant clause with provision for no violation of non-compete provisions
This clause prohibits violations of non-compete provisions.
The Party agrees that they will not engage in any activities that violate the non-compete provisions outlined in this Agreement, either during its term or for a period of [X] years after termination.
Negative covenant clause with provision for no re-engagement of terminated employees
This version prohibits re-engaging terminated employees.
The Party agrees that, for [X] years following the termination of this Agreement, they will not re-engage or hire any employee or contractor of [Party A] who was terminated for reasons related to this Agreement, without prior written consent.
Negative covenant clause with provision for no provision of similar services to competitors
This version restricts providing similar services to competitors.
The Party agrees not to provide similar services or products that directly compete with [Party A] to any competitor within [X] miles of [Party A]’s business during the term of this Agreement and for [X] years following its termination.
Negative covenant clause with provision for no duplication of business models
This clause prohibits duplication of business models.
The Party agrees not to duplicate or replicate the business model or business strategies of [Party A] during the term of this Agreement and for [X] years after its termination, unless otherwise agreed upon in writing by [Party A].
Negative covenant clause with provision for no opening of competing locations
This version restricts the opening of competing locations.
The Party agrees that for a period of [X] years after termination of this Agreement, they will not open, operate, or participate in the ownership of any location that directly competes with [Party A] in the same geographic region.
Negative covenant clause with provision for no competing bids or proposals
This clause addresses competing bids or proposals.
The Party agrees that during the term of this Agreement and for [X] years after its termination, they will not submit competing bids or proposals to any client or entity that [Party A] is currently engaged with or has provided services to.
Negative covenant clause with provision for non-compete in specified sectors
This version includes specific sector restrictions.
The Party agrees not to engage in any competitive activities within the [specific sector or industry] during the term of this Agreement and for a period of [X] years thereafter, within [geographic area].
Negative covenant clause with provision for no provision of similar products or services
This clause restricts providing similar products or services.
The Party agrees that during the term of this Agreement and for [X] years following termination, they will not develop, manufacture, or sell any products or services that are similar to those provided by [Party A].
Negative covenant clause with provision for no competitive joint ventures
This version limits competitive joint ventures.
The Party agrees not to enter into any joint venture, partnership, or collaboration that directly competes with [Party A] in [market or industry] during the term of this Agreement and for [X] years after its termination.
Negative covenant clause with provision for no investment in competing businesses
This clause restricts investment in competing businesses.
The Party agrees that during the term of this Agreement and for [X] years following termination, they will not invest in or hold any ownership interest in any business that competes directly with [Party A] in [specific market or region].
Negative covenant clause with provision for no provision of competing services
This version restricts the provision of competing services.
The Party agrees that, for a period of [X] years after termination of this Agreement, they will not provide services or products that directly compete with those offered by [Party A] during the term of this Agreement, within [specified region].
Negative covenant clause with provision for no conflicting representations
This clause prohibits conflicting representations.
The Party agrees not to make any representations or statements, either written or verbal, that are inconsistent with or contradict the terms and objectives of this Agreement during the term of this Agreement and for [X] years following termination.
Negative covenant clause with provision for non-compete based on job function
This version ties the non-compete to job function.
The Party agrees not to engage in any business activity that directly competes with [Party A] in a role similar to their position within [Party A] for a period of [X] years after the termination of this Agreement.
Negative covenant clause with provision for no violation of non-solicitation
This version includes non-solicitation provisions.
The Party agrees that, for [X] years after the termination of this Agreement, they will not directly or indirectly solicit business from or provide services to any clients or customers of [Party A] who were known to the Party during the term of this Agreement.
Negative covenant clause with provision for no competing investments
This version addresses competing investments.
The Party agrees that, for [X] years after termination of this Agreement, they will not invest in any business or entity that directly competes with [Party A] in [specified market].
Negative covenant clause with provision for no competitive marketing initiatives
This clause restricts competitive marketing activities.
The Party agrees that, for [X] years after termination of this Agreement, they will not engage in or sponsor any marketing initiatives that directly compete with [Party A]’s marketing efforts, including online advertising, promotions, or public campaigns.
Negative covenant clause with provision for no engagement with competitors’ clients
This version prevents engagement with competitors’ clients.
The Party agrees that, for [X] years following termination, they will not engage with, provide services to, or communicate with any client of a competitor of [Party A] that they interacted with during the term of this Agreement.
Negative covenant clause with provision for no breach of fiduciary duty
This clause prohibits breach of fiduciary duty.
The Party agrees not to take any actions during or after the term of this Agreement that could be considered a breach of fiduciary duty to [Party A], including acting in any capacity that conflicts with the best interests of [Party A].
Negative covenant clause with provision for no recruitment of competitors’ employees
This version restricts recruitment of competitors’ employees.
The Party agrees not to recruit or solicit any employees or contractors of a direct competitor of [Party A] for a period of [X] years after the termination of this Agreement, without prior written consent from [Party A].
Negative covenant clause with provision for non-competition in a certain field
This version restricts competition in a specific field.
The Party agrees not to engage in or provide services in [specific field] for [X] years following the termination of this Agreement, within the geographical limits defined in [Section X].
Negative covenant clause with provision for no diversion of intellectual property
This clause prevents diversion of intellectual property.
The Party agrees that, for [X] years after termination, they will not use or divert any intellectual property, inventions, or patents created during the term of this Agreement for any purpose that competes with the interests of [Party A].
Negative covenant clause with provision for no competitive solicitation
This version addresses competitive solicitation.
The Party agrees not to directly or indirectly solicit business from or enter into any agreements with competitors of [Party A] for a period of [X] years after termination of this Agreement, without written approval from [Party A].
Negative covenant clause with provision for no engagement with suppliers of competitors
This clause limits engagement with competitors' suppliers.
The Party agrees not to engage, contract with, or use any supplier that exclusively provides products or services to a competitor of [Party A] for [X] years following termination, unless written consent is given by [Party A].
Negative covenant clause with provision for non-compete in a specific territory
This version restricts competition in a defined territory.
The Party agrees that, for [X] years following the termination of this Agreement, they will not engage in any business activity that competes with [Party A] in [specific geographical territory].
Negative covenant clause with provision for no use of confidential business methods
This clause limits the use of confidential business methods.
The Party agrees not to use or disclose any confidential business methods, strategies, or trade secrets belonging to [Party A], during the term of this Agreement and for [X] years after its termination.
Negative covenant clause with provision for no involvement with direct competitors
This version restricts involvement with direct competitors.
The Party agrees that, for [X] years after termination of this Agreement, they will not be employed by or involved in any business that competes directly with [Party A], within the same industry or market.
Negative covenant clause with provision for no involvement in competing products
This clause restricts involvement in competing products.
The Party agrees not to develop, produce, or market any products that directly compete with [Party A]’s products for a period of [X] years following the termination of this Agreement.
Negative covenant clause with provision for no competing business alliances
This version prevents competing business alliances.
The Party agrees that, for [X] years after termination, they will not form alliances, partnerships, or joint ventures with any business entity that competes directly with [Party A] in [specific market].
Negative covenant clause with provision for no disruption to customer relationships
This clause restricts disruption to customer relationships.
The Party agrees not to disrupt, interfere with, or seek to change the relationships between [Party A] and its customers, for a period of [X] years following the termination of this Agreement.
Negative covenant clause with provision for no competing distribution channels
This version restricts competing distribution channels.
The Party agrees not to develop or participate in any distribution channels that directly compete with [Party A]’s distribution network for a period of [X] years following the termination of this Agreement.
Negative covenant clause with provision for no conflicting business interests
This version restricts conflicting business interests.
The Party agrees that, during the term of this Agreement and for [X] years following its termination, they will not directly or indirectly own, operate, or invest in any business that conflicts with the business interests of [Party A].
Negative covenant clause with provision for no diversion of sales opportunities
This clause limits the diversion of sales opportunities.
The Party agrees not to divert or attempt to divert any sales opportunities, contracts, or leads generated by [Party A] during the term of this Agreement to any third party for a period of [X] years after termination.
Negative covenant clause with provision for no entry into competitive markets
This version prohibits entry into competitive markets.
The Party agrees that, for [X] years after termination of this Agreement, they will not enter into or participate in any market or industry that directly competes with [Party A] in [specific sector].
Negative covenant clause with provision for non-solicitation of contractors
This version addresses non-solicitation of contractors.
The Party agrees not to solicit or attempt to hire any contractors or consultants who worked for [Party A] during the term of this Agreement for a period of [X] years after termination.
Negative covenant clause with provision for no engagement in competitive bidding
This version prevents engagement in competitive bidding.
The Party agrees that, for [X] years after the termination of this Agreement, they will not submit a bid or proposal to any client or customer of [Party A] for services or goods similar to those provided under this Agreement.
Negative covenant clause with provision for no trade secret disclosure
This version restricts trade secret disclosure.
The Party agrees not to disclose, use, or transfer any trade secrets or proprietary information obtained during the term of this Agreement for [X] years after termination, unless expressly authorized by [Party A].
Negative covenant clause with provision for no direct or indirect competition
This version prohibits both direct and indirect competition.
The Party agrees that, for [X] years following the termination of this Agreement, they will not engage, directly or indirectly, in any competitive activities that could harm the interests of [Party A] in [specific market or product].
Negative covenant clause with provision for no competing services after business transfer
This version applies after a business transfer.
In the event of the transfer or sale of [Party A]’s business, the Party agrees not to offer or provide competing services within [X] years of the transfer, within the same geographic region or market.
Negative covenant clause with provision for no solicitation of suppliers
This version limits the solicitation of suppliers.
The Party agrees not to solicit, hire, or engage any suppliers or vendors of [Party A] during the term of this Agreement and for [X] years after its termination.
Negative covenant clause with provision for no interference with business relationships
This version restricts interference with business relationships.
The Party agrees not to interfere with or disrupt any existing or future business relationships between [Party A] and its clients, customers, or suppliers during the term of this Agreement and for [X] years after termination.
Negative covenant clause with provision for no engaging in competitive online activities
This version addresses online competitive activities.
The Party agrees that, for [X] years following the termination of this Agreement, they will not participate in any online activities, including digital marketing or e-commerce platforms, that directly compete with [Party A] in [specific market].
Negative covenant clause with provision for no disclosure of business strategies
This version restricts the disclosure of business strategies.
The Party agrees not to disclose or share any of [Party A]’s business strategies, plans, or market analysis with any competitor for a period of [X] years following the termination of this Agreement.
Negative covenant clause with provision for no operation of competing businesses
This version restricts the operation of competing businesses.
The Party agrees not to operate, control, or invest in any business that competes with [Party A] in the same market, industry, or sector for [X] years after the termination of this Agreement.
Negative covenant clause with provision for no solicitation of business from former clients
This clause prevents solicitation of former clients.
The Party agrees that for [X] years after the termination of this Agreement, they will not solicit, directly or indirectly, business from any former client or customer of [Party A] with whom they interacted during the term of this Agreement.
Negative covenant clause with provision for no use of confidential financial data
This version restricts the use of financial data.
The Party agrees not to use any confidential financial data, reports, or projections provided by [Party A] for their own benefit or the benefit of a third party during the term of this Agreement and for [X] years after its termination.
Negative covenant clause with provision for no establishment of competitive partnerships
This version prevents establishing competitive partnerships.
The Party agrees not to establish or engage in any partnerships, collaborations, or joint ventures with any competitors of [Party A] for [X] years following the termination of this Agreement.
Negative covenant clause with provision for no involvement in competing mergers or acquisitions
This version limits involvement in mergers or acquisitions.
The Party agrees that, for [X] years after the termination of this Agreement, they will not be involved in any mergers, acquisitions, or business combinations with a competitor of [Party A] in [specific market or region].
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.