What is a non-compete clause in an agency agreement?

A non-compete clause in an agency agreement serves as a protective measure for the principal by preventing the agent from engaging in business activities with competitors for a specified period and often within a defined geographic area after the termination of the agency relationship. This helps ensure that sensitive information, trade secrets, and client relationships cultivated during the tenure of the agency are not leveraged by the agent in favor of competing businesses, thereby safeguarding the principal's market position and commercial interests. A well-crafted non-compete clause is essential for maintaining competitive advantage and can be crucial in industries where client relationships and proprietary information are particularly valuable.