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Restrictive covenant

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    #31
    So, lets start again to try understand the big picture here rather throwing random irrelevant questions all over the place.

    So you've got a contract via an agency with a client. The contract forbids you from introducing people to the client. Yes any clause in the contract is enforceable should certain conditions be met for a start. If you've any doubt you should have read it and questioned it at the beginning and if it was 'illegal' it should have been picked up in the contract review you had done.

    So what does this mean? In most cases the client has an agreement with an agency to provide contractors. Usually its because the client doesn't want to do it so won't take contractors on directly. This is important. This would mean even if you introduced someone they would have to go through the agent. This kinda kills this whole thread dead if it is the case but lets carry on.

    The reason this clause is in place is because the agent makes money placing contractors. Lets say 10% so a 400 quid contractor makes the agent 40 quid a day. If you decide to work directly with the client the agent loses that income so it's caught by the clause. If you introduce a contractor directly to the client this bypasses the agreement the agent has where they should get the 40 quid a day but by going direct you've robbed them of 40 quid they should rightfully have as part of their client/agent agreement. This is their loss which they will argue if you do manage to do this and breach your contract. They will lump a whole host of other costs on that and you'll be liable for it for the perceived time that contractor could be on site. This bit is arguable.


    So at this point you are clear what the clause means, why it's there and what the agent will lose by doing this yes? That should answer 2 or 3 of your scatter gun questions yes?


    Now getting away from the hypothetical made up questions... You have to understand how your situation works to know what is and isn't enforceable and if you would be on the hook. If the agent is the sole supplier and they client cannot or won't take contractors on directly then there is no problem working the client to identify the need and suggesting someone as they will have to go through the agent anyway. It is a bit stupid to do this without telling the agent though, for fairly obvious reasons. The best thing to do is involve the agent in the discussions which is not only professional but you may be able to negotiate a finders fee with the agent. All good business.


    If the client can take contractors on direct or you purposely try and ignore this clause then you are in trouble. It's stupid to do this as there is no benefit to you as you said but you become liable for breach and all the lost revenue the agent could have got by supplying that contractor. I can see little reason why you should end up in this position if you've half a clue what you are doing.


    I think that answer another few of your questions and overall gives you some understanding of what is going on.

    That help and answer your issues?
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #32
      And for further reading on the nuances of handcuffs do a google search. We've covered this topic endlessly in all sorts of scenarios.

      Go to google and type in 'handcuff site:contractoruk.com/forums

      Change the keyword using other terms like 'restrictive covenant' etc to see other threads.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #33
        Originally posted by northernladuk View Post
        So, lets start again to try understand the big picture here rather throwing random irrelevant questions all over the place.

        So you've got a contract via an agency with a client. The contract forbids you from introducing people to the client. Yes any clause in the contract is enforceable should certain conditions be met for a start. If you've any doubt you should have read it and questioned it at the beginning and if it was 'illegal' it should have been picked up in the contract review you had done.

        So what does this mean? In most cases the client has an agreement with an agency to provide contractors. Usually its because the client doesn't want to do it so won't take contractors on directly. This is important. This would mean even if you introduced someone they would have to go through the agent. This kinda kills this whole thread dead if it is the case but lets carry on.

        The reason this clause is in place is because the agent makes money placing contractors. Lets say 10% so a 400 quid contractor makes the agent 40 quid a day. If you decide to work directly with the client the agent loses that income so it's caught by the clause. If you introduce a contractor directly to the client this bypasses the agreement the agent has where they should get the 40 quid a day but by going direct you've robbed them of 40 quid they should rightfully have as part of their client/agent agreement. This is their loss which they will argue if you do manage to do this and breach your contract. They will lump a whole host of other costs on that and you'll be liable for it for the perceived time that contractor could be on site. This bit is arguable.


        So at this point you are clear what the clause means, why it's there and what the agent will lose by doing this yes? That should answer 2 or 3 of your scatter gun questions yes?


        Now getting away from the hypothetical made up questions... You have to understand how your situation works to know what is and isn't enforceable and if you would be on the hook. If the agent is the sole supplier and they client cannot or won't take contractors on directly then there is no problem working the client to identify the need and suggesting someone as they will have to go through the agent anyway. It is a bit stupid to do this without telling the agent though, for fairly obvious reasons. The best thing to do is involve the agent in the discussions which is not only professional but you may be able to negotiate a finders fee with the agent. All good business.


        If the client can take contractors on direct or you purposely try and ignore this clause then you are in trouble. It's stupid to do this as there is no benefit to you as you said but you become liable for breach and all the lost revenue the agent could have got by supplying that contractor. I can see little reason why you should end up in this position if you've half a clue what you are doing.


        I think that answer another few of your questions and overall gives you some understanding of what is going on.

        That help and answer your issues?
        I will err on the side of caution. I am still not convinced that any of these arguements would stand up in court in the particular situation I have described. How do you prove that the client would have paid the £40 on top of the contractor's rate?

        Comment


          #34
          Originally posted by cannon999 View Post
          I will err on the side of caution. I am still not convinced that any of these arguements would stand up in court in the particular situation I have described. How do you prove that the client would have paid the £40 on top of the contractor's rate?
          It's very simple. That is the agreement with agent and fundamentally how they work and earn their crust. They agree to supply contractors and make X pounds. You sidestep them where they would normally supply the contractor and they just produce the financials as if the contractor went through them. Very easy. I really don't see how you can think they won't stand up. And yet again, this is assuming the client will take the contractor direct, which in a vast majority of cases they won't.

          But again.. You are completely misunderstanding the basic fundamentals of contractor engagement. The client has a rate they will pay a agent to find them a contractor. The agent gets the money and pays the contractor an agreed sum. The agent pockets the rest. You get a percentage of the agencies money, not the clients money. The money you get paid is between you and the agent and has no bearing on what the client pays the agent. This is how contractors get screwed by agents pocking 20-25% plus of the money.

          I am a little surprised a contractor with so many years under his belt is missing the basics of how we are engaged. A much better understanding of what we do would have made this whole thing a non question.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #35
            Originally posted by cannon999 View Post
            I will err on the side of caution. I am still not convinced that any of these arguements would stand up in court in the particular situation I have described. How do you prove that the client would have paid the £40 on top of the contractor's rate?
            you don't understand how courts work.

            If it went to court (and there's probably another 5 pages of thread to explain that) there are two questions being asked of the judge.

            1) Are you liable for the losses incurred?
            2) How much are those losses?

            If you lose point 1 then YOU need to demonstrate why the amount being claimed (which could well be much higher than just their margin) is not correct and why.
            See You Next Tuesday

            Comment


              #36
              Originally posted by Lance View Post
              If you lose point 1 then YOU need to demonstrate why the amount being claimed (which could well be much higher than just their margin) is not correct and why.
              Can you source a reference for this? This sounds totally ridiculous.
              Last edited by cannon999; 15 February 2020, 02:31.

              Comment


                #37
                Originally posted by cannon999 View Post
                Can you source a reference for this? This sounds totally ridiculous.
                Why? Agent takes you to court for 50k. Yiu argue you aren't liable and lose. Then you have the opportunity to argue the costs are not realistic and in your opinion the 50k they want for losing a month's commission is unreasonable.

                Sounds like common sense no?
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #38
                  Originally posted by cannon999 View Post
                  Can you source a reference for this? This sounds totally ridiculous.
                  Why don’t you explain how you think it should work?
                  See You Next Tuesday

                  Comment


                    #39
                    Originally posted by Lance View Post
                    Why don’t you explain how you think it should work?
                    Yes please do. Every step has been explained to you but you've questioned every response despite obviously not having a scooby almost to the point of trolling.
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

                    Comment


                      #40
                      Originally posted by northernladuk View Post
                      Yes please do. Every step has been explained to you but you've questioned every response despite obviously not having a scooby almost to the point of trolling.
                      You haven't actually explained anything, just gave a few anecdotal examples which would never stand up in court.

                      Comment

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