Contract T&C's

[explorer]

Have been offered a new contract this evening. It has come in two parts-the (contract) agreement itself, and an IPR agreement. Although the T&Cs are in general good, but some a couple of them need your valued opinion:

XX: ClientCo
1. During the term of this agreement, the contractor shall not, without the prior written consent of XX, engage in any activity which may conflict with XX's interest regarding confidentiality or provide similar services to any other party (whether on a paid basis or not). Any question as to whether a particular activity may constitute a conflict of interest shall be resolved by obtaining XX's written consent prior to engaging in the activity.

2. XX will make payment to myCo without deduction of any employee taxes (PAYE, NI). The contractor agrees, to the extent they are liable, to ensure that the company settles these employee taxes directly with the inland revenue, and fully idemnifies XX in the event that the contractor fails to do so and IR being an action against XX to reclaim these employee taxes. if required by IR XX deserves the right to deduct any employee taxes in connection with these invoices and, where any deductions have been made, the net amt shall be paid to the contractor or the company as required, and the deducted amt to IR.

3. Contract states the billing to be done monthly, and sets payment deadline to be one month from the billing date, making it a potential two month delay before I get paid. What do you think abt this?

4. One month notice period on my side, a week on their's. .

Clause 1 and 2 come from the IPR doc, rather than the contract itself.
As a limitedCo, shouldn't I be free to do business with other companies, if there's a possibility? Isn't it an IR35 pointer (employee-type restriction)?

Isn't 2 Bull-tulip? Is there any chance, howsoever remote, that IR holds ClientCo responsible for any evasion of taxes on myCo's part, while we are in a B2B relationship?

And this one made me laugh:

"As consideration for entering into this agreement, XX will pay a sum of ten pounds (£10) to teh contractor. By signing this agreement, the contractor confirms that they have received this payment."

The contract also contains some nice clauses, like the provision for interest for late payment, with 2% more interest rate than the highest one offered by HSBC. (Although it would be meagre, I guess).

Thanks in advance for your opinions, guys !! I will not sign the agreement without being paid by signing bonus :-).

[TheFaQQer]

1 is bollox - sign that and you'll have a hard time arguing you are outside IR35, since you need someone's permission for your company to do other work.

2 is OK - doesn't really make any difference at the end of the day.

3 - up to you whether you think it's OK or not. I would try to get it changed to invoice weekly if they are on 30 day terms, or invoice monthly then get paid within 7 days.

4 - meh. I never ask for a notice period.

[explorer]

Have been offered a new contract this evening..

Thanks TF
A quick update guys..

Getting the payment terms changed from a month to 7 days (with monthly billing), proved to be an easy exercise-Did not have to ask twice..

However, the clause "During the term of this agreement, the contractor shall not, without the prior written consent of XX, engage..." is still a bone of contention. Clientco asked me to come up with suggestions for a possible rewording, and I suggested this:
"During the term of this agreement, the contractor shall take all reasonable care and necessary precautionary measures, to the extent possible, to protect xx's interest regarding confidentiality of sensitive information (defined in 2.1 above), by avoiding indulging in any activity which may result in the disclosure/leakage of such information (in whole or part), to any party-either with-in or outside of xx. The contractor shall resolve any doubt he might have, as to whether an activity results in a breach of confidentiality, by consulting xx management, prior to engaging in such an activity".

However, they aren't happy with this

Any suggestions, please?

[explorer]

Any suggestions, please?

Come on, Guys...Cann't anyone think of possible rephrasing of clause 1 in OP above, as to steer it outside IR35 ?

[RichardCranium]

The para causing the problem is:

1. During the term of this agreement, the contractor shall not, without the prior written consent of XX, engage in any activity which may conflict with XX's interest regarding confidentiality or provide similar services to any other party (whether on a paid basis or not). Any question as to whether a particular activity may constitute a conflict of interest shall be resolved by obtaining XX's written consent prior to engaging in the activity.

Could it have been written in two parts thus:

1a. During the term of this agreement, the contractor shall not, without the prior written consent of XX, engage in any activity which may conflict with XX's interest regarding confidentiality. Any question as to whether a particular activity may constitute a conflict of interest shall be resolved by obtaining XX's written consent prior to engaging in the activity.

1b. During the term of this agreement, the contractor shall not, without the prior written consent of XX, provide similar services to any other party (whether on a paid basis or not).

If so, is it part 1a they want to keep but might give up part 1b?

I would not expect a clause about confidentiality to be an IR35 pointer.

It might be sensible to change the expression "similar services" to be more explicit. If they want you to build a web site for selling widgets, you don't want to be prevented from building a web site for smeone else selling wotnots. Changing "similar services" to "services to organisations that compete with XX or such that they might compete with XX" or some such might help. In that way it does not prevent you have concurrent clients.

[explorer]

The para causing the problem is:


Could it have been written in two parts thus:
If so, is it part 1a they want to keep but might give up part 1b?

I would not expect a clause about confidentiality to be an IR35 pointer.

It might be sensible to change the expression "similar services" to be more explicit. If they want you to build a web site for selling widgets, you don't want to be prevented from building a web site for smeone else selling wotnots. Changing "similar services" to "services to organisations that compete with XX or such that they might compete with XX" or some such might help. In that way it does not prevent you have concurrent clients.

Thanks RC..

I started my negotiation with them, by dissecting the problematic clause exactly the same way as you did, and asked them to do away with 1b. They weren't happy.. Although, tbh, I wouldn't have been completely happy signing 1a itself. Doesn't it imply that I'm not to even MOVE, without asking them if it's a risk to their confidentiality??

And yes, they have defined "services" as "Software and system Development", at the top of the contract, in the definitions section.

[SueEllen]

Thanks RC..

I started my negotiation with them, by dissecting the problematic clause exactly the same way as you did, and asked them to do away with 1b. They weren't happy.. Although, tbh, I wouldn't have been completely happy signing 1a itself. Doesn't it imply that I'm not to even MOVE, without asking them if it's a risk to their confidentiality??

No it's a case of using common sense. Only if you are not sure then you ask.

Lots of contracts have confidentiality clauses in them.