ClientCo to be replaced by NewClientCo and handcuff clause

**SueEllen** · 21 January 2011, 13:28

Few things:
1. If end ClientCo is a massive company i.e. a multinational with UK sites in plenty of locations, or client company is a large holding company of loads of companies the clause is unenforceable if it was put before the courts as it's too widely worded
2. If you are opted-in, due to having not signed an opt-out or signing a invalid opt-out, the clause is unenforceable if it was put before the courts
3. If you are opted-out the clause would be deemed a restraint of trade due to the time period if put before the courts and therefore would be unenforceable.

The judge would put a pen through the unenforceable parts, and would not put replacement wording in it's place. This means the clause wouldn't make sense and couldn't be enforced.

Therefore I suggest you talk to a solicitor and get them to confirm the points above in writing.

If the current agency comes back to you and argues that you have breached the clause by going with new agency, tell them via an email direct from your solicitor that the entire clause is unenforceable due to how it is written and request they take you to court to enforce it. (If they refuse to pay you treat it like a bad debt but I suggest you delay starting the new contract until the payment comes through by taking a little holiday.)

Restrain clauses need to be written so they are specific to the situation in hand.

The agency should have got the clause reviewed by a lawyer as they would have just named the end client and would have put a more reasonable time frame.

I get clients/agencies insisting on 1 year restraint of trade and the lawyers I've used have come back and said openly that I will ignore the clause totally if it's left at that time period.

**Old Greg** · 21 January 2011, 13:29

Originally posted by kingcook View Post

MyLtdCo has a contract with AgentCo, and i work with ClientCo, standard stuff.

ClientCo are actually being contracted by BiggerClientCo, so i'm indirectly working for BiggerClientCo.

BiggerClientCo have just given notice to ClientCo to end the contract, and are being replaced by NewClientCo. Things are currently in the handover stage between ClientCo and NewClientCo.

MyLtdCo contract with AgentCo ends in 1 weeks time.

A few days ago, i was contacted by NewClientCo telling me that they have heard i've been doing good work, and they'd like to give me a contract to work with them (again on BigClientCo's projects(s)). I'm considering going direct with NewClientCo, but not sure if the handcuff clause in the existing contract between MyLtdCo and AgentCo.

The handcuff clauses says, "The Service Provider [MyLtdCo] and its Directors undertake that they shall not and that they shall procure that the Consultant(s) [Me] shall not enter into any agreement, whether directly or indirectly, to supply services of a similar nature to the Client [ClientCo] or a subsidiary or associated company of the Client or to the Client’s clients [BiggerClientCo??], other than through the Company [AgentCo] for a period of 12 months following the termination of the Agreement."

IMHO, i'm not doing anything wrong by entering into an agreement with NewClientCo, but the fact that i'll be working with BiggerClientCo anyway, does this count as entering into an agreement with them indirectly?

IANAL but the accepted view seems to be that 12 months is a restraint of trade and thus unenforceable. So just ignore it but make your life easier by not mentioning it to anyone.

**kingcook** · 21 January 2011, 14:20

Originally posted by SueEllen View Post

Few things:
1. If end ClientCo is a massive company i.e. a multinational with UK sites in plenty of locations, or client company is a large holding company of loads of companies the clause is unenforceable if it was put before the courts as it's too widely worded

ClientCo are global, although i don't know how many sites or contracts they have.

Originally posted by SueEllen View Post

2. If you are opted-in, due to having not signed an opt-out or signing a invalid opt-out, the clause is unenforceable if it was put before the courts

I'd opted out, but have since found out that it's invalid due to me opting out 5 days AFTER meeting ClientCo.

Originally posted by SueEllen View Post

3. If you are opted-out the clause would be deemed a restraint of trade due to the time period if put before the courts and therefore would be unenforceable.

Sounds like it would be a restraint of trade, yes.

**kingcook** · 21 January 2011, 14:22

Originally posted by Old Greg View Post

IANAL but the accepted view seems to be that 12 months is a restraint of trade and thus unenforceable. So just ignore it but make your life easier by not mentioning it to anyone.

I won't be mentioning it to anyone, but it may be hard for me to stop others! Old ClientCo and NewClientCo will be working on site for the next couple of months, see. They will see me and they will know i have taken a contract out with NewClientCo!

**kingcook** · 21 January 2011, 14:23

Thanks for your posts, appreciated

ClientCo to be replaced by NewClientCo and handcuff clause