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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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I have a draft contract from a client and I am disputing inclusion

Customer Question

I have a draft contract from a client and I am disputing inclusion of this restraint clause:
"5.2. The Consultant shall not, during the term of this agreement, engage with or contract with any competitor of the Company in the same business, being the business of supplying Tea and Tea-related training courses and/or certifications; events and memberships".
The client has asked me to reword this to my liking but to ensure they are not negatively affected financially. As I have pre-existing training committments and may well undertake training workshops in the future (as part of my business) I am not sure how to meet both objectives.
I will appreciate your help.
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Have you explained to your client that this is your livelihood and to sign this contract you not be able work after you have provided them with services? What I would suggest is two points (i) Limit the effect to geographical area i.e no competitors within 1 mile of the Company and (ii) Limit it in terms of time - for a period of say 3 months? Would that work for you? As the clause is worded I doubt it would be enforceable anyway as it represents such a restraint on trade. Kind regards AJ
Expert:  Alex J. replied 1 year ago.
Thank you AJ
Customer: replied 12 months ago.
Hi Alex, sorry for the pause - Easter got in the way. Thank you for your kind response which indeed confirms my opinion. I copy below the full restriction clause. Any suggestions on a sensible rewording of this to give an equitable break for both sides, particularly the last sub-clause re. suppliers? Many thanks, Nigel.
quote < 5. Restrictions5.1. The Consultant shall not, during the period of this agreement or for a period of 12 months following termination of this agreement, in connection with providing similar services to the Services:5.1.1.Solicit, deal or contract with any customer or client of the Company with whom he has had direct contact as a consultant to the Company during the term of this agreement or during previous six months before termination of this agreement; or5.1.1.Solicit, deal or contract with any supplier to the Company with whom he has had direct contact as a consultant to the Company during the term of this agreement or during previous six months before termination of this agreement.5.2. The Consultant shall not, during the term of this agreement, engage with or contract with any competitor of the Company in the same business, being the business of supplying Tea and Tea-related training courses and/or certifications; events and memberships. > unquote
Expert:  Alex J. replied 12 months ago.
Hi Thank you. On reading this, it seems like actually on 5.2 is unreasonable and restraint on your trade - do they have any customers or suppliers that you already deal with or have as client yourself or have pitched to for work?
Customer: replied 12 months ago.
None that I specifically know of at present but the tea business is a small world so inevitably it will happen in the future. Also I could reasonably expect to give training to their course attendees who may want contract with me subsequently for specific advice.
Expert:  Alex J. replied 12 months ago.
Hi, Thank you. Is the issue not actually that they do not want you competing, what they want is for you to keep their confidential and commercial sensitive information secret and confidential?
Customer: replied 12 months ago.
Alex, you may well be right - they have a fair chunk on confidentialty and non disclosure . I have suggested and they agree that this should be on a mutual non disclosure basis.quote <
8. Confidential information
8.1. The Consultant agrees, other than in connection with the Company’s usual business, not to use or disclose to any third party any Confidential Information which he learns during the course of providing the Services to the Company, whether provided to him on purpose or learned accidentally, and which, by its nature or content, could cause the Company damage or loss or potential loss (whether financial or reputational) if such information was disclosed.8.1. The Consultant agrees not to disclose such Confidential Information during the period of this agreement and for a minimum period of ten years after termination of this agreement. In the case of any personal data or sensitive personal data, this agreement not to disclose is permanent.My comment to them: Confidential information and non-disclosure agreement should be on a mutual basis Consultant to Company & Company to Consultant. They agree to this.9. Intellectual Property Rights9.1. The Intellectual Property Rights in or relating to any of the Services, whether devised by the Consultant or provided by the Company shall belong absolutely to the Company, subject to any pre-existing, third party rights. This shall include any Intellectual Property Rights in any items devised during and upon completion or part-completion of the Services by the Consultant.My comment to them: In view of the low level of fee offered (Schedule 2. Clause 3.3) for advanced course development I would offer instead of assignment of copyright to grant Company non-exclusive license to use the work product. They say: Agreed: please advise on how you would like this clause/s to be re-written.9.2. In particular, the database right in any database of clients or the copyright of teaching and training materials and/or methods in any quotation provided by the Company shall belong absolutely to the Company and the Consultant agrees not to make or retain any copy of such items, without specific written permission to do so by the Company.9.3. The Consultant, if required, shall upon any reasonable demand by the Company and at the cost of the Company, execute such further documents or deeds to transfer any such intellectual property rights to the Company or any third party as directed by the Company. The Consultant hereby waives his moral rights in any intellectual property devised by him.My comment: While by agreement copyright may be assigned in return for a higher fee, or licenced as noted against clause 9.1 I do not agree to waive my moral rights i.e the right of attribution and the right of integrity. They say: Agreed: please advise on how you would like this clause/s to be re-written.
> unquote
Expert:  Alex J. replied 12 months ago.
Hi, Thank you. There is no point in agreeing to or having a non compete clause or non solicitation clause if there is no commercial, the end result will be a court wont enforce. Further more you cannot agree to something that affects you ability to trade. If the clients commercial interests are protected by confidentiality then the non compete clause should be deleted. The only clause that is potentially reasonable is non solicitation of their staff - i.e not to poach their employees - this is perhaps reasonable.In relation to your other points:Re wording clause 9.1. The Intellectual Property Rights in or relating to any of the Services, whether devised by the Consultant or provided by the Company shall be licensed to the Company on a non exclusive, worldwide basis so as to allow the Company to take full benefit of the Services, but always subject to any pre-existing, third party rights. Re wording clause 9.3 -9.3. The Consultant, if required, shall upon any reasonable demand by the Company and at the cost of the Company, execute such further documents or deeds to transfer any such intellectual property rights to the Company or any third party as directed by the Company. The Consultant hereby retains his moral right and right of attribution in any intellectual property devised by him.
Customer: replied 12 months ago.
Many thanks for rewording of the IP clauses - most helpful. I think we are getting there.Re your " There is no point in agreeing to or having a non compete clause or non solicitation clause if there is no commercial, the end result will be a court wont enforce" do you suggest I go for dropping the entire restraint section in light of the proposed mutual non disclosure clause? Any advice on how to pitch that in my covering letter to them?
Expert:  Alex J. replied 12 months ago.
Hi, Thank you. I would start by asking them what the commercial purpose of the non compete clause is - you need to earn a living so there for your cannot agree to something that prevents you from trading. You do not actually compete with their business, so surely their actual concern is they do not want you giving commercial sensitive information to their competitors - this is covered by non disclosure. The end result is the non compete clauses do not actually serve any purpose?
Customer: replied 12 months ago.
Alex, Reviewing their previous response on this they mentioned the financial aspect of competition rather than loss of sensitive information:ORIGINAL CLAUSE: The Consultant shall not, during the term of this agreement, engage with or contract with any competitor of the Company in the same business, being the business of supplying Tea and Tea-related training courses and/or certifications; events and memberships.MY RESPONSE: This restraint on supply of tea related training needs to be more specific. Technically I cannot agree to THE CLAUSE as it stands as I advise the World Tea Academy and have a Chair at Tocklai Tea Research Institute and provide workshops and training for other groups such as the US League of Tea Growers –THEIR RESPONSE: Agreed; again as long as THE COMPANY is not negatively affected financially and/or otherwise then we are happy to review this clause. Please advise on wording you would feel comfortable withAm I right to suggest ditching the whole clause as an unacceptable restraint on my trade (except perhaps as you originally suggested) within (say) 1 mile of their London office.
Expert:  Alex J. replied 12 months ago.
Hi, Thank you. Yes it is an unacceptable restraint on your trade as it will affect your ability to sell to your clients. If you are making bespoke training courses perhaps you can commit not to use those with any other clients? Kind regards AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience: Solicitors 2 years plus PQE
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Customer: replied 11 months ago.
Alex
Just to let you know that the client has agreed to ALL my amendments discussed with you - so no loss of copyright and moral rights, or restriction to trade (plus they agreed a 40% increase in daily rate). Thank you for giving me the confidence to go for it. Will definitely use you again.
Nigel
Expert:  Alex J. replied 11 months ago.
Thank you very much. I wish you the best of luck.Kind regards AJ

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