Interpretation of contract agreement terms - non competing period
Ram Mohan
(Querist) 24 October 2013
This query is : Resolved
Dear Sir / Madam,
I was engaged by an American company to provide management consulting services to their clients. For about 6 years, I was a regular employee. After 5 years, they asked us to sign an agreement and one of the terms was that I can not serve their clients for a period of 2 years after leaving / termination of the job. I was terminated one year thereafter on the pretext that they do not have enough business for us. However after 5 months they again approached and suggested to have work relationship with them on a contract basis ans another agreement was signed.
In this new contract, there is a heading of non competition with them but no period is defined and is silent.
I am giving below the full text of the said agreement and would be grateful to understand its implications in case I want to provide similar services to one of their clients. Kindly note that this new client was created only after coming to them on the contractual assignment and did not exist earlier. Now the question is- Can I start working with this client. Presently, I have again been terminated for this contractual alignment. Here is the text:
CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION
6.1 In order to protect the confidentiality and trade secrets of the COMPANY and the XYZ Group, and without prejudice to every other duty to keep secret all information given to him or gained in confidence, the CONSULTANT agrees as follows:-
6.1.1 Not at any time whether during or after the performance of the Consultancy Services (unless expressly so authorised by the COMPANY as a necessary part of the performance of his duties) to disclose in any manner whatsoever, to any person or to make use of any of the trade secrets or confidential information of the COMPANY/the GROUP;
6.1.2 To deliver up to the COMPANY at the end of the assignment, all documents and other materials belonging to the COMPANY or the GROUP (and all copies) which are in his possession including documents and other materials created by him/her during the course of the assignment, along with any copies thereof; and to irretrievably delete any information relating to the business of the COMPANY stored on any storing device which is in his possession outside the premises of the COMPANY. The CONSULTANT shall provide a signed statement that he has fully complied with his obligations under this Clause - 6.1.2;
6.1.3 Not at any time to make any copy, abstract, summary or précis of the whole or any part of any document or other material belonging to the COMPANY/the GROUP except when required to do so in the course of his duties under the assignment in which event any such item shall belong to the COMPANY/the GROUP.
6.2 The CONSULTANT further undertakes to the COMPANY that:
6.2.1 The CONSULTANT shall not, either personally or through an agent, company or otherwise in any other manner, directly or indirectly:
(a) except on behalf of the COMPANY, call, canvas or solicit business or customers for services of a similar type to those being provided by the COMPANY, from any person and/or a firm and/or a company, who is or has been a customer or may be a customer of the COMPANY;
(b) induce or attempt to induce any supplier (or provider of service) of the COMPANY to cease to supply (or provide services), or to restrict or vary the terms of supply (or provision of service) to, the COMPANY or otherwise interfere with the relationship between such a supplier (or provider of service) and the COMPANY;
(c) induce or attempt to induce any director and/or employee and/or consultant of the COMPANY to leave the employment of/engagement with the COMPANY;
(d) approach a client of the COMPANY in an independent capacity or on behalf of a competitor of the COMPANY.
6.2.2 The CONSULTANT shall not at any time after the termination of this agreement and during the Non-Compete Period, directly or indirectly, without the COMPANY’s prior written consent:
(a) use or register or protect in any way any name identical to or likely to be confused with a name (including a trade or company name) previously or presently being used by the COMPANY other than as expressly agreed by the Parties in writing; or
(b) hold himself out as having any continuing connection with the COMPANY to the disadvantage of the COMPANY or in contravention of any terms and conditions of this agreement other than as expressly agreed by the Parties in writing.
6.3 The CONSULTANT acknowledges that the restrictions on competitive activity of the CONSULTANT set forth in this agreement are mainly to protect the value of the COMPANY and secure to the COMPANY and its shareholders the benefits of the business of the COMPANY.
6.4 The CONSULTANT acknowledges and deems the terms and conditions of this agreement, including the remuneration given to the CONSULTANT hereunder, to be adequate consideration for giving the undertakings contained in this Article# VI.
Best Regards and thanks in advance.
ajay sethi
(Expert) 24 October 2013
you cannot carry out consultancy work and solicit business from the company clients . read clause 6.2.1(a). you have signed the terms of contract . it is binding upon you .
even after termination of contract under clause 6.2.2 you need company written consent if you are doing business with its clients . you have agreed to be bound by terms and conditions of the agreement and not do any act in contravention of its terms
Ram Mohan
(Querist) 24 October 2013
Thank you Sir. But would it be binding for whole life unless the company gives the consent to work with the said client. Regards
ajay sethi
(Expert) 24 October 2013
no it would be reasonable period of time . before signing contract why dont you read the clauses ? suggest changes . the company needed your services . you could have protected your interests .
Ram Mohan
(Querist) 24 October 2013
Dear Sir,
Subsequent to above explanation and the interpretation, I am legally bound not to engage with their clients for the similar type of services, herein consultancy, without their written permission. Does it mean, I can engage with them for other type of services like becoming an employee with them say in some or other deptt and do not show consultancy work but some other work e.g, HR , Admn, Maintenance etc.
I am giving below the clause
(a) except on behalf of the COMPANY, call, canvas or solicit business or customers for services of a similar type to those being provided by the COMPANY, from any person and/or a firm and/or a company, who is or has been a customer or may be a customer of the COMPANY;
Regards
Ram Mohan
(Querist) 24 October 2013
Thanks for your reply. It is a mistake from our side not to have thought of it while signing the contract. Is there any way out now? Would be grateful to get the inputs. What could be the reasonable time frame as per the binding laws in case the period of non competency with their clients is not clearly specified?
Thank you very much in advance.
Regards
ajay sethi
(Expert) 24 October 2013
you write a letter to company . mention that inadvertently in contract no time period is mentioned . draw attention to earlier contract wherein non compete period was 2 years . request company to please confirm that for present contract non compete period should be read as 2 years only .
ajay sethi
(Expert) 24 October 2013
thanks for your appreciation
Ram Mohan
(Querist) 24 October 2013
Thank you very much sir. Just last question.
I will be highly grateful to have understanding of the following by an eminent person like you.
Can I can engage with their clients for other type of services like becoming an employee in some functional area than consulting. Say as Production Manager etc
Kind Regards
ajay sethi
(Expert) 24 October 2013
dont do so . it would un necessarily strain your relation ship with company . tomorrow company may allege that you have divulged business secrets .
company has deep pockets . it can afford litigation .
once you send the letter which i have advised yo to send the company may again retain you as consultant
Ram Mohan
(Querist) 24 October 2013
Thanks a lot for your valuable guidance.
I am grateful that I could get so much inputs that would prove to be valuable in deciding further course of action.
Once again, I am really grateful to you.
Kind regards
ajay sethi
(Expert) 24 October 2013
best of luck . thanks again for your appreciation
R.K Nanda
(Expert) 24 October 2013
nothing to add more.
V R SHROFF
(Expert) 24 October 2013
repeated query..........
Raj Kumar Makkad
(Expert) 26 October 2013
The matter of repeated query came to the knowledge of the experts when his whole query was attended so deeply???????
Raj Kumar Makkad
(Expert) 26 October 2013
Experts should try to find out whether the query has already been raised or not prior to replying it.
