Non-Compete and Corp-to-Corp relationships

I have a corp-to-corp relationship with a vendor company ("ABC") to provide financial IT consulting services to client company ("DEF"). Vendor company ("ABC") is not my employer, nor have they provided any training, benefits, rewards, or payment for my services other than the amounts stated on my invoices. Recently, client company ("DEF") severed their contract relationship with vendor company ("ABC") due to code of conduct violations. Client company ("DEF") has asked that I continue to provide services through another vendor on their approved vendor list. My contract with vendor company ("ABC") states that should client company ("DEF") terminate their relationship with vendor company ("ABC") then my contract is likewise terminated. My contract has a non-compete for any existing clients or former clients for a period of one year after contract termination. I would argue that (a) I have a specialized trade; (b) I am being sought after; (c) I am never received any corporate secrets that harm or ruin business; and (d) the scope of the non-compete is much too broad. The vendor should not be able to prevent me from employment due to either embarrassment, ego, or spite. The contract is governed by the state of the laws of Texas. Is this non-compete enforceable?

1 answer  |  asked Nov 21, 2006 2:21 PM [EST]  |  applies to District of Columbia

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Answers (1)

Joshua Rose
Non-Compete Threat

The following answer states some generally applicable principles. You should hire a lawyer to provide detailed research if you intend to rely on the advice.

If the clause simply prohibits you from soliciting former firm clients, it may not apply to a situation where a third party vendor already has the client and hires you. Your "client" is the third party. The language of the agreement may thus give you an out.

Courts are generally reluctant to enforce an agreement that limits your ability to sell your personal services to another employer. Similarly, the fact that the "client" left your first employer before your contract terminated is helpful. The clauses are generally enforcable only to prevent partners, contractors or employees from stealing a business opportunity that properly belongs to the firm. Once the firm loses the client on its own, it is hard to argue that you stole the business.

A final idea (if they really want you) would be to ask your new prime contractor (or the client company) to agree that you did not steal the client and to indemnify you against any effort to enforce the non-compete clause.

posted by Joshua Rose  |  Nov 21, 2006 3:27 PM [EST]

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