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Hi
I work for a consulting company (A). We signed an agreement with a
bodyshop (B) to place our consultant at a large corporation (D). The
bodyshop was also not a direct vendor to the large corporation. They
again signed up with another bodyshop (C) to ultimately place our
consultant at (D).
After a year of work, the consulting company (A) decided to find new
and different set of customers. They posted on the internet that we
have these services available.
Another unrelated bodyshop (Y), a vendor to a totally different
corporation (X) approached (A) after looking at the internet posting.
They offerred the job and decided to sign the agreement.
A reasonable notice was given to the previous companies (B, C & D) and
the consultant was ready to move on. They were all okay with the
termination of the contract.
However - bodyshop (B) found out that consulting (A) is now dealing
with corporation (X). They objected to it and said that (A) should
work with (B) at (X) also. (A) showed no interest in working with (B)
anymore. (B) pressured (A) by saying that (X) is also (B)'s client and
therefore (A) is bound to work with (B). Apparently, (B) is supplying
consultants to (C) to place them at (X) also.
(A) resisted that argument by saying that there was no such agreement
between (A) and (B). There is no agreement between (A) and (C)
directly either. Moreover, (X) cannot be considered (B)'s client
because (B) supplies to (C) and not to (X) directly. (A) understands
that they cannot work for (D) directly because (B & C) introduced them
to (A), unless working through (B & C). However, (A) is free to work
with (X & Y) and anyone else unrelated to work agreement regarding (C
& D). (B) in particular claims (A) cannot work with anyone anywhere
where (B) claims has ultimately placed its consultants.
(B) also claims that (A) had the knowledge of (B)'s presence in (X) -
although there is no paper to indicate that. But claims that that
knowledge would stop (A) from working for (X). Although, (A) says the
knowledge of (B)'s presence in (X) does not matter because (A) was not
introduced by (B) to (X) or by anyone related to (B, C & D). No such
agreements were ever made.
Here are the agreement clauses signed between (A) and (B).
"NON COMPETE CLAUSE
Subcontractor agrees and covenants that for a period of 1 year
following completion or cancellation of contract services for any
cause, subcontractor will not directly or indirectly in his behalf, or
on behalf of any employee or prospective employer attempt to solicit
or market consulting services to, interefere with or endeavor to
entice away from (B), or perform consulting services for, or accept
employment with those customers, persons, or corporations dealing with
(B). The subcontractor agrees, during the duration of this agreement
only to contact (B)'s client on matters pertaining to the said
services. Subcontractor agrees that this noncompete provision will not
adversely affect the livelihood of subcontractor or subcontractor
employees.
Exhibit A: Service Purchase Order (Attached to Contract Agreement)
Client Name/ Location: (D), (D)'s Location"
(B) has also withheld (A)'s last payments. Eventhough the contract
also had explicit clauses on payment schedules:
"Based on client approved time sheets, sub contractor will invoice
Deegit on a month to month basis and the invoice shall be paid with in
net thirty (30) days from the date of invoice."
The invoices have not been paid over 45 days. And Witholding of
payments have happened before (A) terminating the contract with (B, C
& D) and signing the new contract to work with (Y & X).
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Opinions Received:
One lawyer says - (B) does not have a case. (A) can go ahead and work
with (X)
Questions:
- Hasn't the contract been breached by (B) already for non-payment?
- The non compete agreement only applies to (B)'s clients mentionaed
in the 'Exhibit A: Service Purchase Order'. Atleast, this was the
spirit it was signed in anyway. Does that seem clear?
- Can (X) be considered (B)'s client if they are not directly
supplying to (X)? They have no direct interactions/agreements with
(X).
- Contract Agreement between (A) and (B) is under the jurisdiction of
illinois. In case of a law suit, would illinois courts provide
reasonable attorney fee to the winning party? The agreement does not
talk of such a provision for (A). It just says if (B) wins, (B) will
be awarded.
- Please mention any other complications, if obvious.
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