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In a situation where there is a contract between a Freelancer

Customer Question

In a situation where there is a contract between a Freelancer and an Introducer, and the same Introducer and a client, including the following terms:

>> 3.10 No Contracts outside the [Introducer's Marketplace]. User, whether as a Client
>> or Freelancer, agrees to use the [Introducer's Marketplace] to enter into all contracts
>> with other Users and except pursuant to the "Buy Out" provision set forth in Section
>> 4.3, shall take no steps to use any other means to enter into any contract with any
>> other User that was introduced through the [Introducer's Marketplace].

>> 15.3 Law & Jurisdiction: These Terms shall be governed by and construed in
>> accordance with the laws of England and you hereby submit to the exclusive
>> jurisdiction of the English courts.

Then there has been a second contract, outside of the Introducer's Marketplace directly between the Client and Freelancer. Giving exclusive jurisdiction over the same contract for work to the Scottish Courts.

Is it a valid argument to say that the second agreement is void or unenforceable as its existence breaches the terms of the first contract? If yes, under which law, if no, is there a similar argument that can be made in this circumstance?
Submitted: 3 years ago.
Category: Law
Expert:  Senior Partner replied 3 years ago.
Thank you for your question. The second contract direct with the client is not void. Neither would it be unenforceable. The client is not a party to the original contract and is not bound by it. If the client knew about it and deliberately made a direct arrangement that was a breach of the the original contract then the client might be liable of inducing breach of contract. Any claim for that would be under English law as that is the contract law.

The freelancer may be in breach of the first contract and liable of damages but to be blunt I am doubtful if the terms of 3.10 and 4.3 are enforceable as they are pretty wide and non specific. They have no limit as to scope so could cover contracts that have nothing to do with the original introduction or the introducers market place and have no limit in time either. Restrictive covenants of this sort are only enforceable if the wording is reasonable and a fair protection of the contracting parties interests - if they are to wide they will fail and the court will not edit them i.e. it will not apply them in a fair way it will simply refuse to enforce them if the wording is too wide.

Customer: replied 3 years ago.

Hi, thanks for that. One more small point and I will end this question.


 


Since there are two contracts related to confidentiality/non-disclosure the first of which prorogated exclusive jurisdiction to the English Courts and the Second of Which prorograted exclusive jurisdiction to the Scottish Courts.


 


If an action was raised in the Scottish courts relating to confidentiality/non-disclosure would it be a good argument to say that either:


 


a) Since there is an ambiguety as to the jurisdiction clauses, then the rome convention (and others) should be used to identify the jurisdiction that should be used. (domicile, place of action of contract). Therefore the jurisdcition of the Scottish courts should not be used.


 


b) Since the first contract gave enforceable confidentiality assurances under The Rights of Third Parties Act, the second (Scottish) contract, was contracting parties to undertakings that had already been made in the first contract. Meaning that the second contract comprised of an illusory promise as there was no new undertaking made as the parties were already bound to keep confientiality. Is it a good argument to say that the illusory promise makes this contract void?

Expert:  Senior Partner replied 3 years ago.
There is no ambiguity in the jurisdiction clauses. The scottish court have no jurisdiction over a claim under the first contract. The fact that entering into the second contract may have been a breach of the first does not alter the jurisdiction which is relevant to a claim for breach of contract under the first contract.

Illusory promise is a concept of american law i think - in the uk it just a simple promise as opposed to a contract.

there is no reason why the second contract would be void. The contracting parties are different. The fact that the freelancer may be breaching his obligations to a third party does not make the contract void. It might do it fi ti was contrary to public policy in some way but here al you have is covenants to a service provider under the first contract which are portably unenforceable and even if they are can be compensated by monetary damages so there is no public policy issue.

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