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Let's say you have an agreement with a company which includes specific
reference to the commissions you earn at a specified rate for the sale
of services.
That agreement includes a provision that you will not do business
directly with the company's clients, whether you are employed with
that company or not, unless you do a "buyout" to secure the right to
do business directly with a particular company client.
After a period of satisfactory employment, you negotiate an increase
in the commission rate consistent with company policy, which means
there are no restrictions on that commission rate.
Now the company raises the price of the service but wants to lower the
commission rate because you would be making a lot more money than
before. The company claims that the commission rate you earned prior
to the price increase was specifically for the earlier price level and
not the new higher price.
However, there is no documentation to back up that claim. The
documentation for your claim that you are to be paid the commission
without restriction is based on the original written agreement with
the company.
You point out to the company that there were no such restrictions in
the original agreement and that you were being paid a commission rate
consistent with company policy.
You submit your month's sales and apply the current commission rate
for your share of the sales. But when you receive your commission
check it is for a lesser amount because the company did not honor its
agreement for the current commission rate.
Here's my question: Is the agreement you have with that company now
null and void because it broke its side of the agreement? Furthermore,
if you terminate your employment with the company, can you sell
directly to its clients without paying the "buyout" amount?
It would seem that the moment the company broke the contract it had
with you that it broke the contract you had with it - and now there is
no valid agreement with the company to enforce legally.
--
Map Of The Vast Right Wing Conspiracy:
http://www.freewebs.com/vrwc/
Life is not a journey to the grave with the intention of
arriving safely in one pretty and well-preserved piece.
One should rather skid in broadside, thoroughly used up,
totally worn out, loudly proclaiming "WOW! WHAT A RIDE!"
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Let's say you have an agreement with a company which includes
specific
reference to the commissions you earn at a specified rate for the
sale
of services.
That agreement includes a provision that you will not do business
directly with the company's clients, whether you are employed with
that company or not, unless you do a "buyout" to secure the right to
do business directly with a particular company client.
After a period of satisfactory employment, you negotiate an increase
in the commission rate consistent with company policy, which means
there are no restrictions on that commission rate.
Now the company raises the price of the service but wants to lower
the
commission rate because you would be making a lot more money than
before. The company claims that the commission rate you earned prior
to the price increase was specifically for the earlier price level
and
not the new higher price.
However, there is no documentation to back up that claim. The
documentation for your claim that you are to be paid the commission
without restriction is based on the original written agreement with
the company.
You point out to the company that there were no such restrictions in
the original agreement and that you were being paid a commission
rate
consistent with company policy.
You submit your month's sales and apply the current commission rate
for your share of the sales. But when you receive your commission
check it is for a lesser amount because the company did not honor
its
agreement for the current commission rate.
Here's my question: Is the agreement you have with that company now
null and void because it broke its side of the agreement?
Furthermore,
if you terminate your employment with the company, can you sell
directly to its clients without paying the "buyout" amount?
It would seem that the moment the company broke the contract it had
with you that it broke the contract you had with it - and now there
is
no valid agreement with the company to enforce legally.
If the contract is and employment contract, and if it is a normal
contract for this sort of arrangement, it may be terminated at any
time by either party. If that's not the case, if this contract is for
a specific term or if it may not be terminated without cause, tell us.
Meanwhile, I will assume that the employment contract is terminable at
will.
A contract that may be terminated by the employer without cause may
also be modified by the employer at any time. Normally, the contract
would say that. But even if it doesn't, it may be modified. That's
because the company has the right to terminate employment and offer
new employment on new terms. There is no need to go through the
formality of terminating the employment contract and offering a new
one. The company simply makes the change in terms, and you accept by
continuing employment under the new terms, or reject the change by
quitting.
Therefore there is no need for justification and no need for the
change to be logical. If we were discussing salary, the company would
have the right to cut salary however it wants (subject to minimum wage
laws) and the employee has the option of quitting or staying. The
same is true of commission rates. If they decided to cut your rate,
you can quit or stay. However, they are required to give advance
notice. You said the company "wants to lower the commission rate".
If that means the actually gave you notice of the change, then the
deed is done. The only exception would be caused by a contract clause
requiring some number of days of advance notice.
So unless you tell me that my assumptions are incorrect, my conclusion
is that the company has not breached the contract. Therefore you
remain bound by your side of the bargain, if the bargain is
enforceable in the first place.
But the company's clause requiring you to refrain from doing business
with their customers after termination of your employment might not be
legal. If you are in California or in a state which has similar laws
on the point, the clause is unenforceable after termination of your
employment.
McGyver
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On Mon, 17 May 2004 09:56:36 -0700, "McGyver" <Greyprof@msn.com>
wrote:
If the contract is and employment contract, and if it is a normal
contract for this sort of arrangement, it may be terminated at any
time by either party. If that's not the case, if this contract is for
a specific term or if it may not be terminated without cause, tell us.
Meanwhile, I will assume that the employment contract is terminable at
will.
I should have mentioned that it is an "independent contractor"
agreement. There is no language regarding the term of the agreement.
A contract that may be terminated by the employer without cause may
also be modified by the employer at any time. Normally, the contract
would say that. But even if it doesn't, it may be modified. That's
because the company has the right to terminate employment and offer
new employment on new terms. There is no need to go through the
formality of terminating the employment contract and offering a new
one. The company simply makes the change in terms, and you accept by
continuing employment under the new terms, or reject the change by
quitting.
I understand that. My question is if the relationship is terminated
because of breach of contract on the company's part, is it still
binding for the independent contractor.
But the company's clause requiring you to refrain from doing business
with their customers after termination of your employment might not be
legal. If you are in California or in a state which has similar laws
on the point, the clause is unenforceable after termination of your
employment.
The company has its headquarters in California.
If I understand you, either party can terminate the agreement for
whatever reason, in which case the non-compete clause is null and
void, because the company operates in California. The independent
contractor is in Texas. Texas has explicit laws preventing a company
from restricting how a citizen earns a living in general terms. I
would presume that after the agreement is terminated, the independent
contractor is free to solicit the business of former clients.
--
Map Of The Vast Right Wing Conspiracy:
http://www.freewebs.com/vrwc/
Life is not a journey to the grave with the intention of
arriving safely in one pretty and well-preserved piece.
One should rather skid in broadside, thoroughly used up,
totally worn out, loudly proclaiming "WOW! WHAT A RIDE!"
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On Mon, 17 May 2004 09:56:36 -0700, "McGyver" <Greyprof@msn.com>
wrote:
I should have mentioned that it is an "independent contractor"
agreement. There is no language regarding the term of the agreement.
I understand that. My question is if the relationship is terminated
because of breach of contract on the company's part, is it still
binding for the independent contractor.
If the contract is terminated by the non-breaching party in response
to a material breach, then the entire contract is terminated. But
there is almost surely no breach in this case.
But the company's clause requiring you to refrain from doing
business
with their customers after termination of your employment might not
be
legal. If you are in California or in a state which has similar
laws
on the point, the clause is unenforceable after termination of your
employment.
The company has its headquarters in California.
If I understand you, either party can terminate the agreement for
whatever reason, in which case the non-compete clause is null and
void, because the company operates in California.
Nope. Termination without cause doesn't make the non-compete clause
void. The fact that the company operates in California is not
relevant. The clause would be unforceable in California unless the
contract contains a clause saying that California law applies. You
are not in California. If the company tries to enforce the clause,
they will do that in Texas.
The independent
contractor is in Texas. Texas has explicit laws preventing a company
from restricting how a citizen earns a living in general terms. I
would presume that after the agreement is terminated, the
independent
contractor is free to solicit the business of former clients.
Why would you presume that? You came here in the first place looking
for answers on the issue. Why would you now decide to rely on you
presumption instead of looking for the answer? Keep going. Find the
answer. If you are good at internet research, it will be easy to find
the Texas law. It's also wise to consult a local attorney before
competing with a former employer or breaching a contract.
McGyver
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On Tue, 18 May 2004 09:32:34 -0700, "McGyver" <Greyprof@msn.com>
wrote:
The independent
contractor is in Texas. Texas has explicit laws preventing a company
from restricting how a citizen earns a living in general terms. I
would presume that after the agreement is terminated, the
independent
Why would you presume that? You came here in the first place looking
for answers on the issue. Why would you now decide to rely on you
presumption instead of looking for the answer? Keep going. Find the
answer. If you are good at internet research, it will be easy to find
the Texas law. It's also wise to consult a local attorney before
competing with a former employer or breaching a contract.
You are a Texas lawyer?
--
Map Of The Vast Right Wing Conspiracy:
http://www.freewebs.com/vrwc/
Life is not a journey to the grave with the intention of
arriving safely in one pretty and well-preserved piece.
One should rather skid in broadside, thoroughly used up,
totally worn out, loudly proclaiming "WOW! WHAT A RIDE!"
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On Tue, 18 May 2004 09:32:34 -0700, "McGyver" <Greyprof@msn.com>
wrote:
If you are good at internet research, it will be easy to find
the Texas law.
http://library.lp.findlaw.com/articles/file/00393/008734/title/Subject/topic/Labor%20%20Employment%20Law_Employment/filename/laboremploymentlaw_3_47
+++++
2003 Maslon Edelman Borman & Brand, LLP
Enforcing Noncompetition Agreements Across State Lines: The California
and Texas Problems
By William Z. Pentelovitch
[excerpted]
Two noteworthy exceptions to the willingness of states to enforce
properly drafted noncompete agreements are two states with high
concentrations of high technology businesses: California and Texas.
Section 16600 of the California Business and Professions Code provides
that "every contract by which anyone is restrained from engaging in a
lawful profession, trade, or business of any kind is to that extent
void." As a practical matter this means that in all but a very few and
unusual types of situations, noncompete agreements are not enforceable
in California. Section 15.50 of the Texas Business and Commerce Code
permits the enforcement of noncompete agreements but only if they are
"ancillary to or part of an otherwise enforceable agreement at the
time the agreement is made." The Texas Supreme Court interpreted this
statutory provision in Light v Centel Cellular, 883 S.W. 2d 642 (Tex.
1994) in a way that makes it extremely difficult to enforce noncompete
agreements in Texas.
While California and Texas have the right to place restrictions on the
enforceability of noncompetes, their doing so creates problems for
employers outside those states because the courts in both California
and Texas have refused, as a matter of public policy, to give effect
to choice of law provisions that choose the laws of states other than
their own. Thus, if a Minnesota employer operating nationally has a
provision in its noncompete agreements which states that Minnesota law
governs the agreement, the Courts of California and Texas have refused
to honor that choice-of-law provision and applies the laws of their
own states instead.
Further, in recent years courts in both California and Texas have
entered injunctions prohibiting the former employers from commencing
litigation in the state where the contract was made, depriving the
former employers of the benefits of the choice of law provisions in
their noncompete agreements.
Two recent cases involving efforts by Medtronic, Inc. to enforce
noncompete agreements against former employees illustrate this
phenomenon and also, hopefully, portend an end to this pernicious
practice, at least in California.
+++++
--
Map Of The Vast Right Wing Conspiracy:
http://www.freewebs.com/vrwc/
Life is not a journey to the grave with the intention of
arriving safely in one pretty and well-preserved piece.
One should rather skid in broadside, thoroughly used up,
totally worn out, loudly proclaiming "WOW! WHAT A RIDE!"
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On Tue, 18 May 2004 09:32:34 -0700, "McGyver" <Greyprof@msn.com>
wrote:
The independent
contractor is in Texas. Texas has explicit laws preventing a
company
from restricting how a citizen earns a living in general terms. I
would presume that after the agreement is terminated, the
independent
contractor is free to solicit the business of former clients.
You are a Texas lawyer?
Nope. But I've noticed some posts by Texas attorney's on this board.
Stay tuned and one of them might answer.
McGyver
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