I'm interested in a general view as well, but my jurisdiction is New Zealand.

I am looking for a business to purchase, and came across an advert for a business hiring out common equipment. While there are some interesting and less common aspects of what this particular business is hiring, there is nothing particularly unique about it, and this information is publicly advertised. Also I have knowledge of the age and wear-and-tear of the items being leased (but not how much they re being leased for.). Again, If I were to go into competition I would be seeking machinery that is a lot older or a lot newer then what is being sold.

There are some minor pieces of information I can't unlearn which may or may not be relevant - mainly I know how much the lease is, and this colors my judgment - even though I would not be seeking premises in the immediate area.

After signing an NDA, I then received an Information Memorandum and had an initial meeting with the seller and agent. The information I received was such that I decided not to proceed with the purchase of the business (because much of the information provided was clearly false). I did not put in an offer on the business or do due diligence.

I am now considering starting up a business which could be seen as being in competition with this business.

  • A clause in the NDA says The Parties above herein agree that in consideration of the sum of $1.00 to be paid by the Interested Party to (AGENT) that (AGENT) will disclose and supply to it such records, documents, representations, and financial information that (AGENT) may have in its possession, may obtain, or may have prepared.) Does the information being disclosed without payment or, or further discussion about the $1.00 invalidate the NDA?

  • The Interested Party will thereafter maintain the confidentiality of such confidential information and not use the same for any further purpose whatsoever.

  • For the purpose of this Agreement, “confidential information “ shall mean:

    All information disclosed by (AGENCY) relating to the business and financial affairs of (BUSINESS REF/NAME DETAILS) whether by way of records, documents, representations, financial information, and books of accounts, connected with the business affairs and financial details of the Business. Any information which the Interested Party acquires during negotiations in relation to any dealings, transactions or affairs of the Business.

Is there anything stopping me from setting up in competition with this business based on the above. If I do proceed I would rely on my skills and knowledge from people who work in similar businesses and who likely don't even know of this businesses existence.

1 Answer 1


can I start in competition

Yes. First, non-disclosure and non-compete are two different things. The focus of the clauses you reproduce has to do with non-disclosure.

Second, information that was objectively and materially false may void the NDA, since it violates the covenant of good faith and fair dealing. Some "purists" like to argue that contract law in some jurisdictions (example: UK law) does not require that covenant. However, they confuse between being parties' altruistic approach and a non-fraudulent one. The latter is requisite regardless of the jurisdiction.

Third, the language in your NDA uses future tense (see "(AGENT) will disclose and supply [...] records, documents, representations"). The clause does not cover information that was disclosed to you prior to entering the NDA. The prohibition to use "for any further purpose whatsoever" only encompasses "such confidential information" that was referred to in the previous clause.

Fourth, being able to prove that you rely on skills and knowledge acquired from elsewhere would defeat any allegation that you took advantage of agent's disclosures.

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