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NDA with a non-compete clause: 30,000 euro indemnity
Thread poster: toasty

Mirko Mainardi  Identity Verified
Italy
Local time: 19:38
Member
English to Italian
a) Statistically difficult and b) Freelancers are not employees Nov 1, 2018

Eliza Hall wrote:

It's not hard to prove you breached a noncompete. Any source of information showing that you worked for a competitor, poached a customer or lured away an employee during the covered time period can work as evidence. But the main use of noncompetes is not taking people to court for damages -- it's persuading them to stop, or persuading the third parties involved with them (poached customers or employees) to stop being involved with them, by merely threatening a lawsuit.


I think it actually kind of is, but may "accidentally" happen.

And that's why overbroad noncompetes are so dangerous. 98% of freelancers and their customers do NOT want to invest the money to fight such a lawsuit, even if they had that much money to spare, which they often don't. So the typical way it works is: A employee signs a noncompete with B company; A then goes to work for C, a competitor of B; B sends C a letter saying that A is subject to a noncompete that would be violated if A works for C; and therefore C fires A in order to avoid being sued for interfering with A's noncompete.

The broader your noncompete, the more likely B is to send a letter to C in the above example, and the more likely C is to take it seriously and fire A as a result. If it's narrower -- if C can see right off the bat that the noncompete ended last month, for instance, or doesn't cover the geographic location where C is -- the harder it is for B to abuse it.


Except freelancers are not employees and every company we've ever signed an agreement with isn't automatically notified whenever we start collaborating with someone else...

That said, while I refuse to sign agreements which contain clauses I find unreasonable and/or however unfair (and I have seen a lot), I am sure there are many people out there who sign just about anything precisely because in most cases the chances of the unfair clauses being invoked and enforced are slim to none (which IMO is not a good reason to accept them, thus basically contributing to their stabilization and further spread).


Jo Macdonald
 

Marcella Marino  Identity Verified
Italy
Local time: 19:38
Member (2016)
English to Italian
+ ...
Don't sign it Nov 2, 2018

Such a clause is completely unreasonable, in particular if the contract or NDA does not specify how and when there is an actual breach and who decides there is or there has been a breach. Just do not sign it at all.
Be it a scam or not (and I honestly do not believe it is a scam, unfortunately such proposals are made in the real life), do not sign it and don't be afraid to lose such customer, if the other side of the medal is working for him feeling threatened that suddenly they can tell y
... See more
Such a clause is completely unreasonable, in particular if the contract or NDA does not specify how and when there is an actual breach and who decides there is or there has been a breach. Just do not sign it at all.
Be it a scam or not (and I honestly do not believe it is a scam, unfortunately such proposals are made in the real life), do not sign it and don't be afraid to lose such customer, if the other side of the medal is working for him feeling threatened that suddenly they can tell you you have violated the contract.
I would also suggest to write them that you will not sign the proposed NDA, kind regards and that's all. At least your will not to sign such an NDA remains in writing.

Hope to help!
Marcella
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Eliza Hall
United States
Local time: 13:38
Member (2018)
French to English
+ ...
How to prove violation of a noncompete Nov 2, 2018

Chris S wrote:

Eliza Hall wrote:
It's not hard to prove you breached a noncompete. Any source of information showing that you worked for a competitor...

Not in the freelance world, surely?
How could an agency know for certain that I’m working directly for their customer? They might have their suspicions, but neither I nor the customer would exactly be shouting about it. So how could they prove it?


If neither you nor the customer mention it, then certainly it's harder. But, two points:

(1) They don't need to prove it in order to file a lawsuit or send a cease and desist letter to you or the customer. Proof is how you win a lawsuit; it's not required to file one or threaten one. They just need to have reason to believe it -- not sure what the procedure is in any given EU country, but in the US they could file a complaint, i.e. a lawsuit, "on information and belief," and they could send a cease and desist based on nothing but a rumor. As a lawyer I wouldn't recommend doing it on so little, but a private conversation with even one witness -- say, someone who knows you or the customer -- is all that even I would need. Less ethical lawyers might go on even less.

And (2) witness testimony is evidence, so if you or the customer mention it to anyone, that's the hook they need. If they do actually sue you, in the US at least they would be able to demand that the customer and/or you (whoever is a defendant in the lawsuit) turn over records and emails relating to the issue, so in essence you could be forced to provide evidence to prove their claim. Most people wouldn't bother spending the money required to sue someone on that basis, but as I mentioned, most employers use noncompetes as an excuse for sending threatening letters, not for actually filing lawsuits. To justify a lawsuit, there needs to be a lot more money at stake than there usually is with freelancers. But the point remains, it's not as hard to prove as you think it is.


Chris S
 
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NDA with a non-compete clause: 30,000 euro indemnity

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