Are restrictive trade clauses legally enforceable?
Discussion
I am a contractor sometimes conducting contracts through agencies, and they put clauses in the contracts which say I cant form a direct relationship with the end client for a minimum of 12 months after the end of the job (and hence protect their revenue).
Does anyone know if these are actually enforceable, or if anyone has gone to court over this?
Does anyone know if these are actually enforceable, or if anyone has gone to court over this?
You cannot prevent an individual from earning a living.
Restraint of trade clauses are normally included in the employment contracts for sales people and state that should they leave the company for whatever reason, they are forbidden to work for those clients they were within a set distance for a set amoount of time. This is not enforceable as it prevents that person from earning a living doing their trade.
As a contractor, you are probably seen as a company, subcontracted to undertake work for the client (employer). This is different and is enforceable.
Restraint of trade clauses are normally included in the employment contracts for sales people and state that should they leave the company for whatever reason, they are forbidden to work for those clients they were within a set distance for a set amoount of time. This is not enforceable as it prevents that person from earning a living doing their trade.
As a contractor, you are probably seen as a company, subcontracted to undertake work for the client (employer). This is different and is enforceable.
steviebee said:
You cannot prevent an individual from earning a living.
Restraint of trade clauses are normally included in the employment contracts for sales people and state that should they leave the company for whatever reason, they are forbidden to work for those clients they were within a set distance for a set amoount of time. This is not enforceable as it prevents that person from earning a living doing their trade.
As a contractor, you are probably seen as a company, subcontracted to undertake work for the client (employer). This is different and is enforceable.
Restraint of trade clauses are normally included in the employment contracts for sales people and state that should they leave the company for whatever reason, they are forbidden to work for those clients they were within a set distance for a set amoount of time. This is not enforceable as it prevents that person from earning a living doing their trade.
As a contractor, you are probably seen as a company, subcontracted to undertake work for the client (employer). This is different and is enforceable.
Agreed.
They are enforcable, but maybe expensive to legally enforce.
There *may* be certain exclusions for individuals, but certainly for companies the agreement is easier to enforce. How easy it is to enforce is how specific the contract is.
For example, "You cannot work for an IT based company in the UK for ten years" is rather vague and thus too wide ranging and unenforacable.
I perfect example of a good one *is* "You cannot work with or discuss other potential future work with current clients for a period of 12 months". It is specific and very fair for obvious reasons.
It is only enforcable if it is reasonable and 12 months is on the fringe of being reasonable (in my lawyers opinion), therefore I have a 6 month restriction in my contract as this is much more likely to be enforced if it went to court, that said it depends on the the nature of services you provide.
Every business has the right to protect it's profit.
In answer to your question, I have sucessfully taken on a case like this and won (£36k) however it is more likely your agent would go after the client rather than yourself.
Jason
Every business has the right to protect it's profit.
In answer to your question, I have sucessfully taken on a case like this and won (£36k) however it is more likely your agent would go after the client rather than yourself.
Jason
flyingjase said:
It is only enforcable if it is reasonable and 12 months is on the fringe of being reasonable (in my lawyers opinion), therefore I have a 6 month restriction in my contract as this is much more likely to be enforced if it went to court, that said it depends on the the nature of services you provide.
Every business has the right to protect it's profit.
Every business has the right to protect it's profit.
This is also the opinion of my lawyer. He doesnt think 12months would stand up in court. I just wanted to see if others shared his opinion, which they seemilngly do.
kryten22uk said:
This is also the opinion of my lawyer. He doesnt think 12months would stand up in court. I just wanted to see if others shared his opinion, which they seemilngly do.
Thirded. I've litigated a number of claims for injunctive relief based on precisely this point.
There are circumstances where 12 months might be held to be reasonable - senior executives with very sensitive information and contacts, for example - but it may be an uphill struggle to convince a judge that it's not excessive.
Six months, on the other hand, is much more likely to be held to be reasonable.
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