Section 736 of the companies act 1985

**Gentile** · 21 August 2012, 19:36

It basically means that the restriction described in your contract also applies to your working for any of your current client's subsidiaries or holding companies (i.e., any company that holds unreleased stock on your client's behalf). So, if your current contract was with Google, you'd also be restricted from working for YouTube and Picasa, unless you could prove that represented an unreasonable restraint of trade.

**MiniMani** · 21 August 2012, 19:43

Originally posted by Gentile View Post

It basically means that the restriction described in your contract also applies to your working for any of your current client's subsidiaries or holding companies (i.e., any company that holds unreleased stock on your client's behalf). So, if your current contract was with Google, you'd also be restricted from working for YouTube and Picasa, unless you could prove that represented an unreasonable restraint of trade.

Ok great. So that rules me out of that contract :-(

Thank you

**MiniMani** · 21 August 2012, 19:56

Ok you mention clients subsidiaries... I'm not sure this is the case. My client was a large consultancy company and the new client is a different consultancy company. They are both subcontracted out to provide services to different parts of the project (large government org)

Does this still count...?

**Gentile** · 21 August 2012, 20:02

Originally posted by MiniMani View Post

Ok you mention clients subsidiaries... I'm not sure this is the case. My client was a large consultancy company and the new client is a different consultancy company. They are both subcontracted out to provide services to different parts of the project (large government org)

Does this still count...?

Sounds like a different end client to me, so you should be OK. It doesn't matter if their customer (the large Government agency) was one in the same, as long as it wasn't the large government agency that was named on your original contract as "The Client".

E.g., lots of companies such as Atos Origin and Laing Construction worked on providing different services to LOCOG as part of the overall effort to stage The Olympics. If you had a contract with Laing originally, and then another one came up later during the period in which a restrictive covenant applied with Atos, you wouldn't be under restriction, even if both roles were ultimately benefiting LOCOG.

**MiniMani** · 21 August 2012, 20:05

Thanks Gentile, it is actually for Atos! Really appreciate your clear advice.

**Gentile** · 21 August 2012, 20:07

Originally posted by MiniMani View Post

Thanks Gentile, it is actually for Atos! Really appreciate your clear advice.

Spooky. You're welcome.

**Wanderer** · 21 August 2012, 23:56

Originally posted by MiniMani View Post

My previous contract states I cannot work with any client or end client for 6 months (unless I pay previous agency a hefty fee) - end client and client defined in section 736 of the co act...

And did you sign the opt out they were so eager for you to sign? If you didn't sign the opt out then that clause is not enforceable.

It's doubtful if it's enforceable anyway, you could argue that the restraint of trade is too broad and make them fight you in court for the money. If it ever gets that far, you could just close your company and they would get nothing. These clauses only really work when the client refuses to engage you because of it.

My advice is to take the new contract, keep your mouth shut and don't ever talk to that agency again. If they do get wind of what you have done then just stonewall them completely, don't even enter into a conversation with them - all they will come out with is bluff and bluster anyway.

And don't sign the opt out next time....

**Clare@InTouch** · 22 August 2012, 11:43

Might be worth telling your agent that the Companies Act 1985 was replaced by the Companies Act 2006, the new section number for that clause is 1159.

**Gentile** · 22 August 2012, 11:49

Originally posted by Clare@InTouch View Post

Might be worth telling your agent that the Companies Act 1985 was replaced by the Companies Act 2006, the new section number for that clause is 1159.

Or, better yet, don't bother phoning them and just let them try to refer to that statute should they decide to take you to Court at some point.

Section 736 of the companies act 1985