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NSW Problems with Contact Law if Company's Clients Contacts Me?

Discussion in 'Commercial Law Forum' started by Brendan Beveridge, 30 October 2015.

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  1. Brendan Beveridge

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    Hi all,

    I currently have my own business and I'm working on a statement of work for another company for one of their clients. Under the contract I have with this company, there is a clause of no solicitation or canvassing of their clients for a period of 12 months.

    My question is, if/when my statement of work terminates and one of their clients both either the client I do work for or any of their other clients contact my business for services, do I have any problems under Contract Law in taking this business, as I may not know that this is/was one of their clients, or they have contacted me of their own accord?

    Cheers
     
  2. James D. Ford - Solicitor

    James D. Ford - Solicitor Well-Known Member

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    Hi Brendan

    I would need to see the clause before being able to confirm my opinion regarding its application.

    However, based on the fact it is headed - "Non-solicitation or Canvassing", I assume the clause restricts itself to match the wording of the heading, and if so.. both Solicitation and Canvassing involve positive acts on your behalf of contacting or soliciting work from their clients.. that is, submitting a proposal for work, calling them. etc.

    Soliciting or Canvassing, does not include the reverse situation where the client, of their own accord or volition contacts you... which is a positive act on the behalf of the client..

    Kind regards
     
    Brendan Beveridge likes this.
  3. Brendan Beveridge

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    Hi James,

    Firstly thanks for the quick response.
    Your response fits with the line of thinking I had on the matter, however here is the exact wording with the company name replaced:

    7.5 No solicitation
    (a) During the period from the Commencement Date until 12 months after the date of termination or expiration
    of this agreement, neither party may solicit for employment, or independently contract for the provision of
    services, any employee of the other party who is involved in the performance of that party’s obligations
    under this agreement.
    (b) During the period from the Commencement Date until 12 months after the date of termination or expiration
    of this agreement, the Contractor must not, and must procure that each of its Personnel do not, during the
    term of this agreement and for a period of 12 months following the expiration of the agreement solicit, or
    canvass or secure the custom of a person who is during the term of this agreement or at the termination of
    this agreement, a client of Company X Pty Ltd
     
  4. James D. Ford - Solicitor

    James D. Ford - Solicitor Well-Known Member

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    Hi Brendan

    The application turns on a matter of interpretation, based on the heading "No Solicitation", which involves a positive act... and the words "solicit, or canvass or secure the custom" of a person who is during the term of this agreement or at the termination of this agreement, a client of Company X Pty Ltd...

    "solicit, or canvass or secure the custom"...

    I have already dealt with my interpretation of "solicit, or canvass" above... so the answer to your question turns on the words "secure the custom"!

    These words could be interpreted either way.

    However, given the heading, and the previous two words used... it could be strongly submitted that a narrow interpretation is intended... one which involves taking steps (again along the lines of positive steps) to obtain the business of the client... so that merely accepting work, would not be in breach on this clause.... it would be "accepting the custom", rather than "securing the custom".

    Kind regards
     
    Tim W likes this.

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