Solicitation

[Bradburts]

Hi,
I run a small software company and provide services to a companyt. Those services have included creating software programs for a customer of my client.
My client has now offered a new contract for my services with lots of new post termination T&Cs including non competition and non solicitation for 36 months.
I would like to understand my existing contract such that I may politely say no to these agressive T&Cs.

The key lines of my existing contract are:

"Other actvities of the consultant:
It is understood that the consultant may act as a consultant, or be engaged in any other working relationship with a thrid part or parties.
Providing such arrangements do not prevent the proper provision of the services the consltant is under no obligation to notify the organisation <my client>.
For the avoidance of doubt, the consultant is not subject to any restrictions regarding the provision of services to any third party."

but following the above there is another section:

"Confidentiality
... the consultant is likely to have access to secret of confidential information regarding the affairs of ... and its clients, customers ... <long exhaustive list>
During the provision of the services and after the cessation period of 12 months the consultant shall not use (save for benefit of the company) nor divulge any such confidential information without the comoany's permission."

Am I entitled to provide services to my client's customer before the 12 months cessation period?

Thanks

[Amethyst]

Is there something else in that contract which outlines what is meant by the cessation period of 12 months?

Have you been providing services to the clients customer on behalf of the client up till now, but now wish to start working directly for the customer?

[R0b]

You are probably better off either posting the contract on here (redacted of course) or putting into a word document the clauses you want to understand.

A non-compete of 36 months is highly unusual for a software development company and in fact, it might be argued that one shouldn't have a non-compete clause in there if the company specialises in developing software for a particular industry or even a non-compete at all.

Comes down to bargaining power and good negotiation.

[Bradburts]

Is there something else in that contract which outlines what is meant by the cessation period of 12 months?

Have you been providing services to the clients customer on behalf of the client up till now, but now wish to start working directly for the customer?

Thanks, No definition of cessation period that I am aware of except that paragraph.
Enclosed is the contract. contract.pdf
I have been supporting the end client and regularly discuss design etc with them and take requests from them. I am pretty much the only guy involved with the end client on this project. The program is a joint development between my client and their client. I am not sure if this reasonably means that I have provided services to the end client (nor what that would mean in my context). The Annex details my schedule and is rather vague but we all seem to understand the intent that I should deliver the program.

EDIT: My intent is to clarify if I am able to work directly with end client which I may then do if my client does not start to be reasonable.

[R0b]

Where's the clause about non-competition or non-solicit because I couldn't see any of that. In fact as I read it, the contract acknowledges that you will be engaging with third parties and that the client agrees to this provided that other arrangements don't impede you providing the agreed services to the client. More specifically, it confirms the position when it says this:

For the avoidance of doubt, the consultant is not subject to any restrictions regarding the provision of services to any third party.

I have to say that the contract itself seems to be relatively fair on both sides. One thing that is missing is some kind of limitation of liability clause to protect the company in case things go belly up, but then again I couldn't see anything on their side that says their liability is limited too so you may not want to poke the bear on that, though it is risky, even more so if you are held to be personally liable and not through your company.

Another point to consider that I would expect to see in this type of contract some kind of clause referring to client obligations. For example, I would expect the client to:

1. Cooperate with the consultant and provide all reasonable assistance where necessary.
2. Provide any information or documentation as reasonably required to comply with the client's instructions.
3. Provide access to staff (if applicable)and for them to cooperate along the same lines as 2 above.
4. Reserve the right to charge the client for any additional reasonable expenses incurred by the consultant if those expenses are caused by the client changing its instructions or a failure to provide any instructions or a failure to comply with any part of this specific clause.

If your concern is the confidentiality clause then I think it's actually reasonable and probably more than reasonable as I would be inclined to argue on behalf of the client that any confidential information is subject to confidentiality forever. What it means is that any confidential information received during the course of the services cannot be disclosed or used without the consent of the client for a period of 12 months after termination of the agreement.

I odn't like the word cessation period as Ame has said because it's not defined and isn't clear whether cessation means termination of the agreement or when the services have been completed (which may be after termination). I'd be inclined to reword that to say something like below (amends in red):

During the provision of the services and for a period of 12 months after termination of this agreement, the consultant shall not use ...

[Bradburts]

Where's the clause about non-competition or non-solicit because I couldn't see any of that. In fact as I read it, the contract acknowledges that you will be engaging with third parties and that the client agrees to this provided that other arrangements don't impede you providing the agreed services to the client. More specifically, it confirms the position when it says this:



I have to say that the contract itself seems to be relatively fair on both sides. One thing that is missing is some kind of limitation of liability clause to protect the company in case things go belly up, but then again I couldn't see anything on their side that says their liability is limited too so you may not want to poke the bear on that, though it is risky, even more so if you are held to be personally liable and not through your company.

Another point to consider that I would expect to see in this type of contract some kind of clause referring to client obligations. For example, I would expect the client to:

1. Cooperate with the consultant and provide all reasonable assistance where necessary.
2. Provide any information or documentation as reasonably required to comply with the client's instructions.
3. Provide access to staff (if applicable)and for them to cooperate along the same lines as 2 above.
4. Reserve the right to charge the client for any additional reasonable expenses incurred by the consultant if those expenses are caused by the client changing its instructions or a failure to provide any instructions or a failure to comply with any part of this specific clause.

If your concern is the confidentiality clause then I think it's actually reasonable and probably more than reasonable as I would be inclined to argue on behalf of the client that any confidential information is subject to confidentiality forever. What it means is that any confidential information received during the course of the services cannot be disclosed or used without the consent of the client for a period of 12 months after termination of the agreement.

I odn't like the word cessation period as Ame has said because it's not defined and isn't clear whether cessation means termination of the agreement or when the services have been completed (which may be after termination). I'd be inclined to reword that to say something like below (amends in red):

Thanks,
I believe that I understand the confidentiality section and, yes, 1 year is generous to me.
There are new private owners however and they want to throw non compete and no solicit 3 year terms at me which I simply could not accept.
My question is therefore (if I am forced) - can I just work direct for the end client?
I agree with the cessation period comments but (to me) either interpretation seems acceptable; I do not intend to breach confidentiality, just work direct. The end client would approach me if I left and would share all technical data as this is a joint project.

[R0b]

Well if there's nothing in your current contract about solicitation or competing with the client then the new owners can't do anything about it if the end client wants to come to you direct.

As for the confidentiality, I would assume the clause is intended to protect the information being shared with other clients of yours as opposed to sharing with the end client whose information it actually belongs to. Even though it says you can't disclose end client information without the client's consent that would seem a bit backwards if the end client comes to you and asks you to share their own information with them.

The safest thing to do and to avoid any threats of court action is ask the end client to give you the technical data themselves as opposed to you divulging any information. It also means you can't share the client's data with the end client either as that would of course breach the confidentiality clause.

You would be wise in getting your own standard terms and conditions drafted and then you have the benefit of clients working from your own preferred terms rather than theirs. Crucially, as a software development company, you need to cover intellectual property and who owns it, though if silent the law suggests the creator of the IP is the owner in which case that be you.

[Bradburts]

Well if there's nothing in your current contract about solicitation or competing with the client then the new owners can't do anything about it if the end client wants to come to you direct.

As for the confidentiality, I would assume the clause is intended to protect the information being shared with other clients of yours as opposed to sharing with the end client whose information it actually belongs to. Even though it says you can't disclose end client information without the client's consent that would seem a bit backwards if the end client comes to you and asks you to share their own information with them.

Cool.
As I thought. I don't want to end the relationship but at some point of losing money I'll have to & if the end client approaches and shares I do not see myself in breach.

You would be wise in getting your own standard terms and conditions drafted and then you have the benefit of clients working from your own preferred terms rather than theirs. Crucially, as a software development company, you need to cover intellectual property and who owns it, though if silent the law suggests the creator of the IP is the owner in which case that be you.

Yes, I really aught to but (as you said) I beleive that I am owner but the implied licence is more tricky. My annex and my work suggest that the purpose is to provide a program for end customer. So my client has a licence to supply to end customer even if not written into contract (implied). This is a joint development however and so my client may have some other purpose.... If I do not know, should I care?
Main point is I want to draw the line and just get on with business with or without my client.

[R0b]

I understand, everyone is free to do business the way that the want and if you are comfortable with what you are doing then that's all that matters.

Of course if you want to be absolutely certain about your rights of what you can and can't do, you should seek some independent legal advice.

[Bradburts]

Of course if you want to be absolutely certain about your rights of what you can and can't do, you should seek some independent legal advice.

Thanks and indeed. I may well need to do this shortly as there seems little sign of the owner being reasonable.

One final question - does confidentiality extend to the contract itself? Am I free to show the old contract and the new contract to a third party?

[R0b]

Unless the contract says that the terms of the agreement are confidential, you shouldnt have a problem showing the old contract.

[Bradburts]

Unless the contract says that the terms of the agreement are confidential, you shouldnt have a problem showing the old contract.

The contract says that Confidential information includes all 'information relating to the business .<examples>.. confidential to it'. So the contract is 'information relating to the buisiness' but (there being no statement about our contract) it is not clear that the terms of our agreement were meant to be confidential.
Would you agree?

[R0b]

Yes, thats the definition in the contract which is a capitalised term but when you go the actual confidentiality clause, the contract doesn't make use of the capitalised definition - it uses 'confidential information' rather than 'Confidential Information'.

Wouldn't get too hung up on that point but the clause talks about confidential information regarding the affairs of the organisation which would not in the normal sense include the actual terms of the agreement. Generally if you want to keep the terms of the agreement confidential then you would make it explicit by saying something like "the parties agree not to disclose the terms of this agreement to any third party without prior written consent."

I would not consider the definition or the clause itself as meaning that the contract terms were confidential. Normally, companies might want to consider keeping the terms of the agreement confidential if it concerns certain pricing or sales information that they did not want their competitors to know about.

[Bradburts]

Thanks for all your help.