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NSW Sole Trader Pitched at Client - Legal Claims?

Discussion in 'Commercial Law Forum' started by MachineHead, 21 August 2017.

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  1. MachineHead

    MachineHead Member

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    Hello all,

    I am a sole trader, often doing freelance work for businesses in the creative field.

    Recently one such business, whom I have freelanced for in the past, has sent me a ‘Notice of Intent’ (from their work email address) on ground of the following event:

    - The operator of business invited me to a meeting with a potential client (P.C.) (i.e. someone who was looking for the kind of services this business offers and was investigating the options).

    - I attended said meeting, voluntarily and unpaid, along with the P.C. and the business operator. It was here I learnt of the P.C.’s desire for the services and their budget.

    - Shortly thereafter, I formulated a pitch which fit within the budget and arranged another meeting. This time, between P.C. and myself alone. P.C. liked the pitch and has since decided to contract my business for the project.

    - After pitching I have called the business owner and explained what I did, so he was aware.

    The notice of intent, arriving the weekend after said call, outlines these events and then includes:

    “MachineHead used private information attained from the closed-door meeting to quote for the job as a third party, which was not represented at the meeting.

    Business therefore Reserve's the Right to claim any damages should 1. the reputation or good-will of Business suffer in any way from the events that transpired or 2. any company that MachineHead represents generates any revenue due to privileged information received at the closed door meeting with P.C.”

    Business owner claims that ‘after seeking legal advice I've found [MachineHead’s actions are] also illegal’.

    There is no existing contract between Business and myself.

    So yes, I poached a potential client. But does this claim have any legs? What might be a way to settle this situation with minimum resources spent?

    Thank you for any input provided.
     
  2. Rob Legat - SBPL

    LawTap Verified Lawyer

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    What was the basis for you to be invited to the meeting with the potential client in the first place?
     
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  3. MachineHead

    MachineHead Member

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    The business owner invited me because I had freelanced in a key role for him in the past. It is reasonable to say the purpose of the business owner inviting me was to help in convincing the client to contract his business for the job.

    What impact does that have on the situation?
     
  4. Rob Legat - SBPL

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    So, the business owner had no contractual relationship with you, knew you had provided previous work for the client, and apparently invited you to convince the client to engage him for work. There's something missing here. Why would you agree to do this unless there was something in it for you? And were you aware that that was the basis for you going to the meeting?
     
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  5. MachineHead

    MachineHead Member

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    Sorry, it seems my description was somewhat unclear.

    Yes - business owner A has no contractual relationship with me.

    No - I have not provided work for the potential client. Rather to Business A that invited me to the meeting.

    Yes - I believe Business owner A's intention of having me attend was to lend credibility to Business A (I have played a central role on past projects with Business A).

    The reasons attended the meeting were that if the client hired Business A I would have likely been brought on as subcontractor on the project (because of my history with Business A, in the value I have added to past clients). I attended the meeting as a sole trader who had freelanced to Business A in the past.

    If it matters; the IP in the pitch is my own.

    Does that make more sense?

    Thanks,
     
  6. Rob Legat - SBPL

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    Without further information, my point of view would be:
    - His fault for not having any form of confidentiality or restriction of engagement agreement. However, check your previous engagements when doing work for him.
    - If you've pursued the client for work, especially on the same/similar basis as what the business expected to provide, it could be considered unethical. And someone with more experience in IP/employment might be able to steer you in the right direction as to whether there's any potential liability for you.
    - If the client sought your services, particularly where there was not agreement between you and the business, it's only a slight ethical dilemma as to whether or not you accept the work.
     
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  7. MachineHead

    MachineHead Member

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    Thank you for this Rob. I am grateful for the information you've provided.
    Will look into the things you've mentioned.
     
  8. Rod

    Rod Well-Known Member

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    I tend to agree with Rob. The Potential Client (PC) was foolish to trust you.

    Keep in mind the PC may claim the agreement is an oral agreement made over the phone and if it goes to court then it comes down to who the judge believes. Acting unethically is a strike against you but not conclusive evidence by itself.
     
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