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Contractor’s Question: I am thinking about starting a new contract with a new prospective client, but through an existing agency I have just finished a contract with. The new contract names a new end-client and the old client as well, and the old client has been part of the chain of back-to-back contracts. I potentially have the opportunity to go to the client through another agency removing both the old agency and client. But in my previous contract there was a clause that read as follows: ‘If Opted Out then, during the period of six (6) months following termination of this Agreement for any reason whatsoever, without the prior consent of the Company the Contractor undertakes not to supply and undertakes to procure that neither any subsidiary or holding company of it nor the Representative nor any partner of it or any such holding or subsidiary company shall supply whether directly or indirectly any personnel or Services (including without limitation the Representative) to the Client or any subsidiary or holding company of the Client or to any person for whom the Contractor or the Representative performed Services in connection with this Agreement for any reason whatsoever.’ But the final end-user is the same. The end-user is not mentioned in either contract. Do you think I can proceed as I wish or is the last part of the clause so encompassing that you advise not? In both cases the named client are consultancies. [From what I understand] …any firm or person working for a firm would then be ruled out of that firm, is that enforceable as a fair contract? Answer by Egos Ltd , a legal consultancy for IT contractors: It's impossible to give a clear answer here that can be depended on, against the background of these limited facts. It's always necessary to consider the whole contract, and all the surrounding circumstances, before arriving at a conclusion that can be used as a basis for taking decisions which could cost substantially if they were wrong. Broadly, it's necessary: 1 to consider whether the regulations apply, or whether there is in fact a valid opt out (note incidentally that as of Sunday, the requirements for an opt out to be valid have changed - now, the agency must also tell the client that the contractor has opted out), before 'introduction or supply'; if the regulations apply then the restriction is invalid 2 if the regulations don't apply, then the next thing to do is to consider carefully what the terms of the restriction in fact are and what they mean; the contract as a whole needs to be considered against its real world background. Experience shows that it is very easy for the individual to jump to the wrong conclusion as to what the restriction in fact does mean; often, what appears at first sight to be a restriction is found on closer analysis not to obstruct what the contractor in fact wants to do 3 if the regulations don't apply and if on examination the term has a clear meaning that would get in the way of the intentions, then the third challenge is to consider whether or not the restriction is in fact likely to be legally enforceable, or whether or not it is likely to infringe legal rules on restraint of trade. Answering this question is the territory of the expert - and even then, there is rarely certainty 4 finally, regardless of rights and wrongs, real-world impact needs to be considered. Are there risks that money will be withheld if the agency finds out before that all that is due has been paid? And is the client willing to go along with the plans? Apr 9, 2008 Email this article Printer friendly page Previous Page
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