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Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 10175
Experience:  Barrister 17 years experience
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How enforceable is the following clause in a contractor

Customer Question

How enforceable is the following clause in a contractor contract where the Company is my limited company and the representative is me -
not during the period of an Assignment or thereafter for the longer of 9 months or a period equivalent to the total period of all Assignments within the last 2 years with the relevant Hirer either directly or indirectly (whether under a contract of services or contract for services or through any third party) provide any services to the Hirer in any capacity except by contract through us unless the Company shall first have paid to us a fee of 20% of the total remuneration including the value of benefits attributed by HM Revenue & Customs agreed to be paid or provided by the Hirer for the relevant period of provision of such services (but not exceeding 12 months) plus VAT
Submitted: 2 months ago.
Category: Law
Customer: replied 2 months ago.
Sorry, missed the line before that section that reads -8. The Company and separately the Representative shallThe context to the question is that the hirer (the end customer) wants me to provide a team of resources to them. The company I am contracted through don't want to do this in the way the hirer wish, so they can't fulfil the request. Whereas I can fulfil this request if I work directly with the hirer. This will involve me investing in expanding my business and I would be able to find the 20% they are quoting in this statement
Expert:  Buachaill replied 2 months ago.

1. Dear Martin, I regret to say that this clause is fully enforceable and you will have to negotiate if you wish to be excluded from its remit, or else pay the 20% penalty. This type of clause is very common in hiring or work arrangements and the courts have held that this type of penalty clause is enforceable. Essentially, the parties are taken to have freely negotiated this type of contract clause in their agreement and the courts will enforce an agreement of this nature. They won't strike it down as being unfair or unjust.

Expert:  Buachaill replied 2 months ago.

2. As this is a commercial agreement, the courts are loathe to interfere in this type of contract. So, the courts basically leave things to the parties to decide what terms they wish to be bound by. They will also aid their enforcement.

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