Will a non-compete clause prevent a client and supplier cutting me out of the middle?
When introducing your client to a supplier during contract negotiations, you need to ensure your position is protected. Grid Law founder David Walker explains how one reader can achieve this with a non-compete clause in the confidentiality agreement.
I have read your article When are non-compete clauses enforceable?? and wondered if you would be kind enough to steer me in the right direction.
I am a one man limited company selling digital signage solutions and providing consulting services in relation to IT based advertising.
Currently I am working on a project where I need to bring my supplier into the negotiations with my client, thus introducing them.
“I want to protect myself against the client and the supplier working together and cutting me out of the middle.”
I am unsure as to how to achieve this protection and wondered if you could advise please. Having read your article, I think restrictive covenants sounds appropriate, but presumably they would have to be incorporated into a wider agreement?
Ideally, Id like a simple standalone agreement that says party A will not deal directly with party B and will only go through party C (me).
Would I need an agreement with both parties, or would one suffice? Also, are there generic templates for such agreements?
Any advice you can offer would be greatly appreciated.
Thanks for your email.
Yes, you’re absolutely right, a non-compete clause would help you here and they do normally form part of a wider agreement.
In your situation, my advice is that you enter into a confidentiality agreement which also contains non-compete provisions prior to the introduction being made.
The confidentiality provisions will allow all three of you to exchange information freely but at the same time ensuring that the information can’t be used or shared outside of your discussions.
If you haven’t seen it already, please also take a look at my article on protecting your confidential information.
The non-compete provisions would enable you to restrict your client and supplier from working together and circumventing you. If they did work together without your involvement they would be in breach of contract and this would entitle you to claim damages to compensate you for the work you have missed out on.
David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry, advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.
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