Reasonable non-compete clause?

[TheCyclingProgrammer]

New client is mostly happy with my MSA and schedule (based on PCG template) but has asked if I can add a non-compete clause to the schedule that states that I cannot work directly for their end client for a certain period of time.

I have no objection to this, I'm just not sure how to word it - does anybody have a clause that they have used for this that I can borrow and what is a reasonable length of time for such a clause (that would be reasonable and enforceable)?

I looked at the available PCG contracts but couldn't find anything.

[Contreras]

New client is mostly happy with my MSA and schedule (based on PCG template) but has asked if I can add a non-compete clause to the schedule that states that I cannot work directly for their end client for a certain period of time.

I have no objection to this, I'm just not sure how to word it - does anybody have a clause that they have used for this that I can borrow and what is a reasonable length of time for such a clause (that would be reasonable and enforceable)?

I looked at the available PCG contracts but couldn't find anything.

You're right it's not covered, even in the notes, afaict. The "Non-poaching of Staff" clause is close but no cigar, although it might answer your "what's reasonable" question.

The handcuff clause from an 'opted-out' agency contract is effectively what you're looking for I think - restraint of trade against "working for our client direct". Take care you don't leave yourself open to unlimited damages for breach of contract.

How about this Sample Noncompete Agreement?

[TheCyclingProgrammer]

You're right it's not covered, even in the notes, afaict. The "Non-poaching of Staff" clause is close but no cigar, although it might answer your "what's reasonable" question.

The handcuff clause from an 'opted-out' agency contract is effectively what you're looking for I think - restraint of trade against "working for our client direct". Take care you don't leave yourself open to unlimited damages for breach of contract.

How about this Sample Noncompete Agreement?

You're right, the agency clause is close-ish but not quite right.

I'm not too worried about damages as I have no intention of going direct to my client's client but its something to bear in mind, thanks.

My current thinking is 6 months is a reasonable length of time and that it would be hard to enforce anything longer than this but IANAL.

[Old Greg]

You're right, the agency clause is close-ish but not quite right.

I'm not too worried about damages as I have no intention of going direct to my client's client but its something to bear in mind, thanks.

My current thinking is 6 months is a reasonable length of time and that it would be hard to enforce anything longer than this but IANAL.

Suggest 12 months, so it's unenforceable.

[Andy Hallett]

Suggest 12 months, so it's unenforceable.

12 months is very enforceable.

[Contreras]

I'm not too worried about damages as I have no intention of going direct to my client's client but its something to bear in mind, thanks.

I'll bet there are other constraints that you have no intention breaking. There will (should) still be a liability clause, something like to the limit of £xxxk or x% of contract value, whichever is greater. Make sure that any clauses you add don't bypass that.

[SueEllen]

12 months is very enforceable.

Not necessarily.

An handcuff clause must protect a real interest.

I've known people who were able to circumvent 3, 6 and 12 month clauses, and also people who couldn't.

Also the way some agencies tend to write their clauses they are particularly unenforceable especially if the client is someone like BT or Virgin Media.....

[SueEllen]

You're right, the agency clause is close-ish but not quite right.

I'm not too worried about damages as I have no intention of going direct to my client's client but its something to bear in mind, thanks.

My current thinking is 6 months is a reasonable length of time and that it would be hard to enforce anything longer than this but IANAL.

If you are happy to do 6 months put 6 months.

You need to check whether there is a dispute resolution clause elsewhere in the contract. If there is you don't have to put an amount but you do risk them trying to get more money then what you earned for your entire contract and losing out on legal fees. So I would specify a figure.

[malvolio]

As always the test is one of reasonableness. I do Service Management which is a pretty universal, well understood process these days and doesn't really demand a deep knowledge of the client (although it helps!), so it is unreasonable to handcuff me for more than three months. However if I were an expert in some specialist software, or had specific business knowledge of a limited business area that would benefit my client's commercial opposition, a much longer period would be reasonable. If you're supplying something of your own design that they need to make their business work, then it's not about handcuffs but commercial licensing agreements where you give them exclusive use for a period and they pay you to cover the potential lost revenue from not being able to sell it to anyone else.

So you have to look at what it is you are actually protecting, on both sides.

[TheCyclingProgrammer]

I'll bet there are other constraints that you have no intention breaking. There will (should) still be a liability clause, something like to the limit of £xxxk or x% of contract value, whichever is greater. Make sure that any clauses you add don't bypass that.

Double-checked and there is (I'm using the PCG direct MSA):

The Consultancy is not liable for any loss or damage in excess of the higher of (a) ₤100,000, and (b) 125% of the total sums payable under a Schedule, except where it may not lawfully exclude or limit liability. Each party expressly excludes liability for consequential loss or damage, loss of profit, business, revenue, goodwill or anticipated savings. Any liability or remedy for innocent or negligent misrepresentation is expressly excluded. Neither party excludes or limits liability for death or personal injury.

Went with a very simple clause that both client and I are happy with:

The Consultancy agrees that while they are providing Services to the Client and for six months thereafter they shall not directly or indirectly solicit or engage with the end client without the Client’s prior written agreement.

End client is defined earlier in the project as a very specific client.

Thanks for everyone's input.