Conflict of Interest clause in (expired?) contract....

**craig1** · 19 November 2013, 13:34

Was it a standard general services contract plus schedule where the schedule covered the specific piece of work? If so, date is irrelevant and conflict periods start when you finish the last bit of work through that contract. It's a very rare agency contract where you get a brand new contract at every renewal, most often it's a quick email that acts as either a new schedule to the contract or an amendment to the existing one.

**northernladuk** · 19 November 2013, 13:41

Originally posted by IT Gnu View Post

Hi,

I was working via an agency for a company last year. I had a 6 month contract covering the period from 1st Oct until 31st March. In that contract there was the usual COI clause about returning to work for the company either directly or though another agency for a period of 6 months.

The contract was not "extended" formally, i.e. a new contract was not issued, however, I continued to work there for an additional 6 months until the end of September 2013.

Did you continue to work there through the original agency? I presume you just continued as normal. If you continued to work then there is an implied contract in place that has the same terms as the last one. Working without a formal contract is pretty stupid though. Leaves you open to all kinds of issues, not least IR35. They will try argue clear D&C or MoO if they wanted. How successfully is another question.

I have now been approached by the company who wishes to engage my services again, but through a different agency (their new 'nominated' supplier now).

Where do I stand with this? Mentioning it to the old agency may open a can of worms....we didn't have the 'best' of relationships!

Any help / advice gladly welcomed.

Where you opted In or Out? If you have picked the right one then there is only a 12 week (or something like that) period they can handcuff you for.

Also to enforce a handcuff the old agency would have to prove some kind of loss. If the client is no longer using the old agency there is no way they can prove they have lost anything with the new agency taking you on the handcuff is useless. There is a danger that the old agency may bully the client with threats of legal action and the client drops you like a stone. Pretty tulipty trick though.

If the client is still using both and you haven't picked the correct opt in/out option it could be tricky. It would appear in that case they have you bang to rights. The options then are to get the client to strong arm the old agency threatening them with no more work if they don't let it lie or you just don't tell the old agency... but if they are still involved it won't be hard to get spotted.

**Platypus** · 19 November 2013, 13:49

Originally posted by northernladuk View Post

you just don't tell the old agency

^ This

**SueEllen** · 19 November 2013, 14:04

Originally posted by IT Gnu View Post

Hi,

I was working via an agency for a company last year. I had a 6 month contract covering the period from 1st Oct until 31st March. In that contract there was the usual COI clause about returning to work for the company either directly or though another agency for a period of 6 months.

The contract was not "extended" formally, i.e. a new contract was not issued, however, I continued to work there for an additional 6 months until the end of September 2013.

If you didn't opt-out properly - i.e. before interviewed by the client then as long as you know where to get a solicitor at short notice and it's after 12 weeks you can go direct with the client.

So:
1. Make sure your start date is 12 weeks after the end of September 2013
2. Don't tell the old agency
3. If the agency catch you don't enter into dialogue with the the agency and get your solicitor to deal with it. Agents don't like solicitors.

**northernladuk** · 19 November 2013, 14:10

Originally posted by SueEllen View Post

If you didn't opt-out properly - i.e. before interviewed by the client then as long as you know where to get a solicitor at short notice and it's after 12 weeks you can go direct with the client.

So:
1. Make sure your start date is 12 weeks after the end of September 2013
2. Don't tell the old agency
3. If the agency catch you don't enter into dialogue with the the agency and get your solicitor to deal with it. Agents can't spell 'solicitors'.

FTFY

**DirtyDog** · 19 November 2013, 14:39

Originally posted by northernladuk View Post

Also to enforce a handcuff the old agency would have to prove some kind of loss.

This has been mentioned a significant number of times on CUK. Can someone provide a case reference where a judge said that (one which creates a precedent), or a law which details that?

**Platypus** · 19 November 2013, 14:54

Originally posted by DirtyDog View Post

This has been mentioned a significant number of times on CUK. Can someone provide a case reference where a judge said that (one which creates a precedent), or a law which details that?

I thought the whole purpose of suing someone was to recover losses

EDIT: i.e. no loss = no case

**craig1** · 19 November 2013, 15:32

As we're into the bounds of fully commercial multi-tiered contracts here, there's multiple points of law suit available to the agency.

One avenue: If the agent has a contract with client that says they have exclusive rights to you as a specific contractor for a set time then the client takes you on through another agency then that's a very clear breach. They'd then have a relatively clear case to get the equivalent of all their margin the client has paid to the other agency (regardless of what margin the other agency makes)

Avenue 2: They could get a simple injunction barring you from working with that client. They could target you, the client or both of you with equal effectiveness. A relatively cheap thing to get and they can get it ex-parte without you even knowing until the injunction hits your client's desk.

Avenue 3: If they think there's even the slightest possibility of the new agency knowing then they can claim tortuous interference with a contract against them. It's not unreasonable for an injured party, even if they've no provable monetary loss, to claim for punitive damages when they can show that the other party knew, or should have known, there was a contract in force. There have been cases where this has been won simply because the 3rd party knowing there had been work done there before didn't ask the question of whether there was a contract in place already for services.

Avenue 4: They could come after you for their margin for the period outstanding on the tie-in. Again, this can be quite a simple win for them if you've opted-out as you're then in the unprotected wilds of normal commercial contract law.

A final note, there have been cases where prohibited conduct was done within a constrained time period and the courts have ruled that it was so deliberately done in a way that breached the original contract that the entire new contract was deemed to be fair game for damages, even if the genuine damages to the original contract were very limited.

If it's just one contractor then the agency will probably just have a huffy fit about it but take it no further. If there are a number of other contractors involved then this could easily get into large scale losses for the agency that they'll be able to claim for and probably have a good chance of winning.

The simplest measure to avoid all that, of course, is to simply contract through a separate company while caught in the tie-in period... After all, unless you're completely daft you ensure your contracts are fully tied to your company and not to you, you can be a named resource but a contract must be with your company.

**northernladuk** · 19 November 2013, 16:15

Originally posted by craig1 View Post

The simplest measure to avoid all that, of course, is to simply contract through a separate company while caught in the tie-in period... After all, unless you're completely daft you ensure your contracts are fully tied to your company and not to you, you can be a named resource but a contract must be with your company.

It would be interesting to know if this has been tried and how many times it has worked without issue or has not achieved the desired outcome. This in theory shouldn't work...

A simple example would be where a businessman has left his job as a director and has signed a contract to not compete with the company he has just left for a period of time. If he set up a company which competed with his former company, technically it would be the company and not the person competing. But it is likely a court would say that the new company was just a "sham", a "fraud" or some other phrase,[1] and would still allow the old company to sue the man for breach of contract. A court would look beyond the legal fiction to the reality of the situation.

Piercing the corporate veil - Wikipedia, the free encyclopedia

Conflict of Interest clause in (expired?) contract....