Restrictive covenant daisy chain - really???

[Peamarsh]

Thanks for all the valuable input guys - will have a chat with John and see what he wants to do.

[TheFaQQer]

Agency C could consider offering Agency C compensation of 8 weeks commission or so as a goodwill gesture if they sign John on a new contract?

I'd question why Agency C would bother offering anything to any of the other agencies - what's in it for them?

[northernladuk]

I'd question why Agency C would bother offering anything to any of the other agencies - what's in it for them?

And why on earth did you friend accept this arrangement? Being 3 people away from your client looks bad whatever country you are from surely?

[tractor]

..

If it's in the contract, dodgy ground - BUT Agency A threatening not to pay invoices is out of order... in fact if they breach the contract it might even remove the problem!
If Agency B are happy, maybe have an honest discussion with Agency C and ask their advice.

Maybe they can at least cut B out of the chain.

It won't; in fact it may even exacerbate the problem. A party in law has recourse to sue in respect of non or late payment. Indeed the Late Payment of Commercial Debts (Interest) Act provides the first level of recourse and is f course, why it was introduced - to provide a framework of legislation that enables you to avoid going to court for trivial matters and because one enterprising individual tried to wind up some multinational who clearly was not insolvent IIRC.

The second issue is based in Contracts case law where (and I can't remember the case) a litigant is not released from their contractual obligations because one party avoids theirs. This results in the ridiculous situation that can arise in that if the agent does not pay up, you can follow the previous remedies AND ultimately take them to court but it is possible that if you withold services contrary to the contract provisions, they could be in a position to sue the 'party of the other part' (you) UNLESS there is provision in the contract to withold such provision in the circumstances that arise.

This is all from memory and could be complete bulltulip but you should check it all out before just saying OK I'm off if you are not paying!

[SueEllen]

The 12 month thing has come up a number of times and the general consensus is yes 12 months is unenforceable as it is breaches your rights to work of something like that.

12 months is generally unenforceable except in specific cases and a lot of it depends on the wording of the clause.

So if you worked for a company, Vet A in Small Town A, where you had lots of clients but you decided to set up your own practice Vet B 5 miles down the road. Vet A could well enforce their restrictive covenant in court (and win) if it stated concisely that you cannot set up or work for a practice within 12 months in Small Town A. This is due to the fact you risk stealing Vet A's clients and damaging their business. (I use to know someone where this exactly happened to them i.e. they were the one that lost.)

However most contractors on here tend to have clients who are large, or even if the client company is small and does something unique they don't risk damaging their client's business by taking those skills to a competitor down then road.

What is risked is confidentiality i.e. exactly how the client operated their business and stealing information such as code and full details of individual customers. In this case confidentiality agreements are put in the contract which can be enforced from the beginning of the contract and continue afterwards.

The thing I don't know though is would that automtically become 6 months or something or does it throw the whole thing out. Thing is you are neck deep in crap alreadu if you are relying on the 12 months being thrown out if that makes sense.

If it goes to court then the offending parts of the clauses may be struck out so it doesn't make sense, which often renders it unenforceable. They don't put a new restriction period in the contract.

Some contracts are now phrased so that the restriction period is defined from a minimum of 3 up to 12 months so if that happens there is still a restriction.

However as the rest of the clause may be badly worded then the restriction could again be meaningless for example banning someone whose client was BT from working for a competitor, a supplier or a customer in any capacity. (Someone tried something similar on me and a barrister explained why it was unenforceable.)