What is an Undertaking Not to Compete?

Published 09 June 2017

An undertaking not to compete is a clause often used in commercial contracts in industries where competition is fierce.  The clause aims to prevent a partner company or employee from engaging in business with a competitor during the term of the contract.  In some cases, the undertaking not to compete, also sometimes called a non-compete clause, may prevent competition even after the contract ends for a set period of time.

For example, a company that sells products to a distributor may want to include an undertaking not to compete in their agreement to prevent that distributor from selling similar products made by a competitor.  This will keep the distributor loyal to the contract rather than attempting to pursue business from a competing company.

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