Handcuff clause when there is no client-agency contract

[curiousity]

Hi All

Confused about what to do for the best here...

A few years ago, my limited company started contracting for a US client.

The client used an agency and a rolling 12 month contract was set up between my company and the agency (and I presume at the time, between the agency and the client).

Over the years, the client company has changed hands (and name) several times and somewhere along the line, any client-agency contract that might once have existed has been lost in the mists of time.

Current client says they have no contract with the agency - they simply pay invoices raised by the agent and would like me or my company to contract directly if I can exit cleanly from the agency contract.

The contract between the agency and my limited company expires soon, but has a 6 month handcuff clause (I don't recall opting out of agency regs, so I guess in any case the max handcuff time is 8 weeks not 6 months?).

Oddly, the contract wording doesn't seem to preclude me setting up another limited company and contracting directly for the client, or from me contracting personally (outside of a limited company) before the handcuff time elapses. It just mentions my limited company name, and the client company name (which since the contract was written has changed!) Is there something in contract law where the exact names don't matter, rather its the "spirit" of the clause?

So what should I do? Contact the agency for advice, or would that be a can of worms? Ask them whether there is a buy out option? Just let the contract lapse and start contracting directly? Get legal advice?

Also does anyone have any experience of what to watch out for when contracting for US company directly?

Many thanks for any help

[SueEllen]

Unless someone sees the exact clause the information provided is just speculation. It's also not clear what jurisdiction the contract is in.

You should take the contract to a solicitor for an opinion with a list of the names the company has had, how large they are and their presence in the UK and rest of the world. (This info you can find on Google.)

The agent will simply say the clause is enforceable regardless, there as a solicitor will look at the entire contract and the situation then state the likelihood of the clause being enforceable.

[northernladuk]

Changing name does not get around handcuffs. Courts can 'pierce/lift the corporate veil' and identify you as the individual so it will stand. If this were possible there would be little point having contracts.

Handcuffs have to be fair and reasonable to stick. In a vast majority of cases no losses can be demonstrated so they are not worth the paper they are written on. Switch from agent to direct however leaves the agent with a demonstrable loss so you are immediately on the backfoot with this one. It could be it's pretty poor written or too broad and you have an out but could be clutching at straws. The aide showing a loss will be holding most of the cards.

[Boo]

Is there something in contract law where the exact names don't matter, rather its the "spirit" of the clause?

Lookup "lifting the corporate veil"

So what should I do? Contact the agency for advice, or would that be a can of worms? Ask them whether there is a buy out option? Just let the contract lapse and start contracting directly? Get legal advice?

Under the circumstances the simplest thing is to just let the contract lapse at the end then renew with the client directly, keeping stum wrt the agency. If they find out then they might possibly kick up a ruckus so you would need to be careful what you put on any CV you send them afterwards.

Also does anyone have any experience of what to watch out for when contracting for US company directly?

Make sure you get paid ? Doesn't sound like it will be too much of a problem given it's been running smoothly up to now.

Boo

[LondonManc]

IF and it's a big IF (there, that's better), the client no longer deals with that agency at all, the agency are not on ClientCo's PSL and the client can demonstrate no intent to ever deal with the agency again, then you *might* be able to go direct because you are able to do business with ClientCo but the agency is not.

Personally I prefer the agency in place as they tend to pay better than clientcos and there's two places to increase rate if need be.

[northernladuk]

The sad thing about handcuffs is that the legal aspect is one thing, the agency causing an issue the client doesn't want is another. The agents will use the handcuff to bully and scare whoever they need to either knowing full well it won't stick or being totally ignorant of that fact. There has been evidence on here of agents throwing the handcuff in and the client just isn't willing to challenge it and will drop the whole affair like a hot potato leaving himself still out of pocket, the client without the resource they wanted and the contractor on the bench.

Very poor carry on when it happens. No one wins so why do they do it?

[Boo]

Personally I prefer the agency in place as they tend to pay better than clientcos and there's two places to increase rate if need be.

The flip side of this is that there's also two firms to go bust and leave you unpaid, the client and the agency. Also the contracts are more complicated when there is an agency in the loop and clients are notably more flexible than agencies in respect of conract negotiations IME.

Boo

[jmo21]

and somewhere along the line, any client-agency contract that might once have existed has been lost in the mists of time.

Current client says they have no contract with the agency - they simply pay invoices raised by the agent and would like me or my company to contract directly if I can exit cleanly from the agency contract.

yeah, just because you lose a contract, doesn't mean it doesn't exist any more. I'm sure the agency would happily furnish them with a copy that was signed by the clients representative.

[LondonManc]

The flip side of this is that there's also two firms to go bust and leave you unpaid, the client and the agency. Also the contracts are more complicated when there is an agency in the loop and clients are notably more flexible than agencies in respect of conract negotiations IME.

Boo

But with the agency on weekly terms I'm only exposing a week or two at a time rather than up to 13 weeks.

[northernladuk]

And IPSE+ will help with agencies going bump. Dunno about clients though