Reply to: Restriction clause in the contract

[Lance]

I understood now that they waited for the payment from the client ( I never asked client to stop the payment as I trusted the agency as I worked for more than 4 years for them. But at the end is it legal what they are doing?

Thanks,
Viny

This is civil law not criminal law. Very different....
The thing about civil law is it needs to be tested in court. So what they are doing is legal until someone rules that it isn't.

The trick now, is to make it so that they realise they won't win in court if they sue you for damages.
And that they realise they will lose in court if you sue them for non-payment.
When that happens it is cheaper to pay you and drop the other case than to take it further....

Unless they just pursue it out of sheer bloody mindedness.... This is why you don't get emotional. Don't be a dick or they might decide to waste a few hundred quid just screwing you around.

One thing is for certain.... you're not getting this money in the short term. So plan on that and plug away at the other two items.

[WTFH]

I understood now that they waited for the payment from the client ( I never asked client to stop the payment as I trusted the agency as I worked for more than 4 years for them. But at the end is it legal what they are doing?

Thanks,
Viny

Is it legal you breaching your contract?

It might be. It might be, but only in your mind.

And they will argue that.

[Viny]

They were waiting on payment from client to come in before informing you of the breach encase your tried to get client to stop it


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I understood now that they waited for the payment from the client ( I never asked client to stop the payment as I trusted the agency as I worked for more than 4 years for them. But at the end is it legal what they are doing?

Thanks,
Viny

[WTFH]

When they are out of business with client, I am not affecting any money loss/damage to them

If you are 100% certain of this, then you have nothing to worry about.

They might counter that you breached the contract with them that you signed, and that you could have continued working through them and into another agency on the PSL. They may also try to argue that it was because of your actions that they aren't on the PSL.

It would be worth speaking to a solicitor who specialises in contract law (not an employment law). These guys do not come cheap, but they will be able to advise you. You'll need to provide them with the facts and make sure you get everything in writing from the agent and the client.

[GhostofTarbera]

I had a call with the guy from agency and mentioned that issue , and asked if they have any other opportunity with other clients. But he mentioned the market is bad an they dont have any role available with them suitable for me.
He didnt mentioned any other thing that time, as I was communicating them regarding my invoice and approval of time sheet for the past 2 months via my office email ( clients ) , I didnt hid the information from them. The account team from agency confirmed to me that I will get my payment of invoices on 24th april. But than from 27th april they started all this new thing of breach.

When they are out of business with client ( as client would only deal with PSL) , I am not affecting any money loass/damage to them then why I should be deprived from getting a job and why should be penalised?

They were waiting on payment from client to come in before informing you of the breach encase your tried to get client to stop it


Sent from my iPhone using Contractor UK Forum

[Lance]

I had a call with the guy from agency and mentioned that issue , and asked if they have any other opportunity with other clients. But he mentioned the market is bad an they dont have any role available with them suitable for me.
He didnt mentioned any other thing that time, as I was communicating them regarding my invoice and approval of time sheet for the past 2 months via my office email ( clients ) , I didnt hid the information from them. The account team from agency confirmed to me that I will get my payment of invoices on 24th april. But than from 27th april they started all this new thing of breach.

When they are out of business with client ( as client would only deal with PSL) , I am not affecting any money loass/damage to them then why I should be deprived from getting a job and why should be penalised?

it's not a job. It's a B2B contract that you agreed to. Different rules apply.

[Lance]

1. I had a contract with them that ended on 27th of march ( I also gave them 4 weeks of notice)
2. I had to go via a different agency ( which is a Preferred supplier to the client) because the client did not want to continue with then (and several other agencies) because they were not preferred suppliers of the client.

the clauses in the contract are :

The contract of my previous agency says :
1. The Service Provider and its Directors or Consultants hereby acknowledge that the Company expends significant resources in sourcing and maintaining its clients and is entitled to protect its commercial interests. The Service Provider and its Directors or Consultants shall be jointly and severally liable to pay to the Company a contractual fine equivalent to eight weeks' worth of the fee rate passing at the time where the Service Provider and its Directors or Consultants end the contract without serving the full notice period agreed and outlined in Schedule 1. The Company’s right to raise additional claims remains unaffected.

2. Neither the Service Provider and its Directors or the Consultants shall enter into any agreement, whether directly or indirectly, to supply contract Services/services of a similar nature to the Client or a subsidiary or associated company of the Client or to the Client’s client or the Client's customers, other than through the Company for a period of 12 months following the termination of this agreement. The Service Provider and the Consultant shall be jointly and severally liable to pay to the Company a contractual fine equivalent to ‘twelve weeks' worth of fees passing for the contract at the time of the violation for each case of violation. The Company’s right to raise additional claims remains unaffected.

Thanks,
Viny

you could write back to them denying it, and asking for evience to the contrary. They might be guessing and hoping you slip up.

[Lance]

Hello,

I sent a letter before action to the agency asking for the payment in 14 days and in response they have sent a LBA to my limited company.

they are asking for the amount 36k as fine

The contract was with Agency - my ltd company . I was working with the client and my ldt company was invoicing to Agency . Agency invoicing to client. Finally my ltd company was getting paid for the services as per the invoice. The agency was getting the commission ( so this commission should be their fees ) but they are claiming the complete amount of an invoice raised by my ldt company as their fees.
Is this legal ?

yes it's legal..... They demand you accept that the moon is made of cheese and it still be legal. Doesn't mean you have to, or that they can make it stick in court.
It's just a starting position. They estimate that they've lost £36k of revenue. You then respond with a counter offer, or outright refusal. Be very cautious how you do this as you risk providing them with evidence they can use against you.
Anything you write that is 'Without prejudice' is a way for you to negotiate in a way that they cannot use as evidence. You might consider seeking legal advice. It would cost you c. £1500

This is totally separate from the late payment though. So don't mix the two up and keep dunning.

[Viny]

12 months is long, but that doesn't mean that a week is reasonable.

The question is relating to your point 2. Who forced you to accept a new contract that broke the terms of your previous one?
Did you discuss this new contract with your old agent before accepting it?

I had a call with the guy from agency and mentioned that issue , and asked if they have any other opportunity with other clients. But he mentioned the market is bad an they dont have any role available with them suitable for me.
He didnt mentioned any other thing that time, as I was communicating them regarding my invoice and approval of time sheet for the past 2 months via my office email ( clients ) , I didnt hid the information from them. The account team from agency confirmed to me that I will get my payment of invoices on 24th april. But than from 27th april they started all this new thing of breach.

When they are out of business with client ( as client would only deal with PSL) , I am not affecting any money loass/damage to them then why I should be deprived from getting a job and why should be penalised?

[WTFH]

1. I had a contract with them that ended on 27th of march ( I also gave them 4 weeks of notice)
2. I had to go via a different agency ( which is a Preferred supplier to the client) because the client did not want to continue with then (and several other agencies) because they were not preferred suppliers of the client.

the clauses in the contract are :

The contract of my previous agency says :
1. The Service Provider and its Directors or Consultants hereby acknowledge that the Company expends significant resources in sourcing and maintaining its clients and is entitled to protect its commercial interests. The Service Provider and its Directors or Consultants shall be jointly and severally liable to pay to the Company a contractual fine equivalent to eight weeks' worth of the fee rate passing at the time where the Service Provider and its Directors or Consultants end the contract without serving the full notice period agreed and outlined in Schedule 1. The Company’s right to raise additional claims remains unaffected.

2. Neither the Service Provider and its Directors or the Consultants shall enter into any agreement, whether directly or indirectly, to supply contract Services/services of a similar nature to the Client or a subsidiary or associated company of the Client or to the Client’s client or the Client's customers, other than through the Company for a period of 12 months following the termination of this agreement. The Service Provider and the Consultant shall be jointly and severally liable to pay to the Company a contractual fine equivalent to ‘twelve weeks' worth of fees passing for the contract at the time of the violation for each case of violation. The Company’s right to raise additional claims remains unaffected.

Thanks,
Viny

12 months is long, but that doesn't mean that a week is reasonable.

The question is relating to your point 2. Who forced you to accept a new contract that broke the terms of your previous one?
Did you discuss this new contract with your old agent before accepting it?

[Viny]

Sounds like they are saying you are in breach of contract by not working through them with the same client.

While you work on chasing them for their payment, you might want to check your own situation with regard to the contract you had with them and the restriction on it, and how/who instigated the process of you not working through them any more.

1. I had a contract with them that ended on 27th of march ( I also gave them 4 weeks of notice)
2. I had to go via a different agency ( which is a Preferred supplier to the client) because the client did not want to continue with then (and several other agencies) because they were not preferred suppliers of the client.

the clauses in the contract are :

The contract of my previous agency says :
1. The Service Provider and its Directors or Consultants hereby acknowledge that the Company expends significant resources in sourcing and maintaining its clients and is entitled to protect its commercial interests. The Service Provider and its Directors or Consultants shall be jointly and severally liable to pay to the Company a contractual fine equivalent to eight weeks' worth of the fee rate passing at the time where the Service Provider and its Directors or Consultants end the contract without serving the full notice period agreed and outlined in Schedule 1. The Company’s right to raise additional claims remains unaffected.

2. Neither the Service Provider and its Directors or the Consultants shall enter into any agreement, whether directly or indirectly, to supply contract Services/services of a similar nature to the Client or a subsidiary or associated company of the Client or to the Client’s client or the Client's customers, other than through the Company for a period of 12 months following the termination of this agreement. The Service Provider and the Consultant shall be jointly and severally liable to pay to the Company a contractual fine equivalent to ‘twelve weeks' worth of fees passing for the contract at the time of the violation for each case of violation. The Company’s right to raise additional claims remains unaffected.

Thanks,
Viny

[WTFH]

Hello,

I sent a letter before action to the agency asking for the payment in 14 days and in response they have sent a LBA to my limited company.

they are asking for the amount 36k as fine

The contract was with Agency - my ltd company . I was working with the client and my ldt company was invoicing to Agency . Agency invoicing to client. Finally my ltd company was getting paid for the services as per the invoice. The agency was getting the commission ( so this commission should be their fees ) but they are claiming the complete amount of an invoice raised by my ldt company as their fees.
Is this legal ?

Please help me to understand this.
Thanks,
Viny

Sounds like they are saying you are in breach of contract by not working through them with the same client.

While you work on chasing them for their payment, you might want to check your own situation with regard to the contract you had with them and the restriction on it, and how/who instigated the process of you not working through them any more.

[Viny]

Hello,

I sent a letter before action to the agency asking for the payment in 14 days and in response they have sent a LBA to my limited company.

they are asking for the amount 36k as fine

The contract was with Agency - my ltd company . I was working with the client and my ldt company was invoicing to Agency . Agency invoicing to client. Finally my ltd company was getting paid for the services as per the invoice. The agency was getting the commission ( so this commission should be their fees ) but they are claiming the complete amount of an invoice raised by my ldt company as their fees.
Is this legal ?

Please help me to understand this.
Thanks,
Viny

[Old Greg]

I think so. I've had invoices paid 3 months late (I didn't notice they were late!). It barely caused a ripple in my cashflow.

[NotAllThere]

I'd thought I'd apply a bit of out of the box thinking and address why we just missed the worst period for contracting ever and then a pandemic hit and the OP can't last a month without money.

A good lesson don't you think?

I think so. I've had invoices paid 3 months late (I didn't notice they were late!). It barely caused a ripple in my cashflow.