Exclusivity clause in retainer contract

cabracoole · Mar 28, 2019

Hi, hoping someone can help me. I run a consultancy (Ltd. company) and I have obtained a new client. They want to include an exclusivity clause within the contract for me not to work with any of their competitors. They have not signed on the line but I have quite a lot of expertise in their niche, and having just left full-time employment to set up my own company, I really do not want to agree to it but at the same time I do need the client. Are there any legal reasons why I should/could refuse? Thanks!

Newchodge · Mar 28, 2019

No legal reasons, but this is your business, you tell them your terms. You might suffest that sych a clause may suggest an employer/employee relationship, but it isn't a very strong argument.

Engage Legal · Mar 29, 2019

Hi Cabracoole - Newchodge is right. It seems more like a commercial point rather than a legal one. Will most likely come down to what you can negotiate. Good luck.

The Resolver · Mar 29, 2019

Ask them why they require such a clause. If its because they fear leakage of confidential information to their competitor then suggest a tight confidentiality clause.

The Byre · Mar 29, 2019

One way to deal with this situation is for the client to list their competitors and define time frames. e.g. may not work for Scroteposture & Sons Ltd., Boots Boots Boots Boots Marshinup & Downagen LLP and Mrs Millie Tooley of 17 Oil Drum Lane, Sidcup, for a period of one year.

Mr D · Mar 29, 2019

I can understand someone who uses your services full time on a particular project not wanting you to work for a competitor at the same time.
If not being specific enough would you be signing up to never work with any competitor that company has? Unrealistic.

cabracoole · Mar 29, 2019

The Resolver said:
Ask them why they require such a clause. If its because they fear leakage of confidential information to their competitor then suggest a tight confidentiality clause.

Its because they dont want me to help their competitors as they know I can massively help them.

Mr D · Mar 29, 2019

cabracoole said:
Its because they dont want me to help their competitors as they know I can massively help them.

Pretty much describes most contractors.

NickGrogan · Mar 29, 2019

cabracoole said:
Its because they dont want me to help their competitors as they know I can massively help them.

Assuming that this is true, then they should be to pay you enough to not want to work for any of their competitors. Have you increased your rates to allow for this clause?

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Exclusivity clause in retainer contract

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