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

toasty  Identity Verified
Italy
Local time: 18:36
Member (2013)
Italian to English
Oct 29, 2018

Hi all,

I recently was sent an NDA agreement that includes a non-compete clause. In case of full or partial breach (without any reference to "knowing" of course), the contract specifies the translator has to indemnify the agency 30,000 euros regardless of actual damages.

This seems ludicrous to me. Have any of you come across something similar and successfully had it removed?

Thanks in advance!


 

Tom in London
United Kingdom
Local time: 17:36
Member (2008)
Italian to English
Only a fool Oct 29, 2018

Only a fool would sign it. It's probably a scam.

Thomas T. Frost
Yolanda Broad
Kuochoe Nikoi-Kotei
IanDhu
 

toasty  Identity Verified
Italy
Local time: 18:36
Member (2013)
Italian to English
TOPIC STARTER
Not a scam Oct 29, 2018

Hi Tom,

Unfortunately it's not a scam. It's an agency that I met at a translation conference (one of the conference's sponsors no less) and they have extremely high reviews on the blue board.

In any case, your response has convinced me to ask to have it removed.
Thank you!


IanDhu
 

Nikki Scott-Despaigne  Identity Verified
Local time: 18:36
French to English
Check Oct 29, 2018

Perhaps you could check whether they mean that you must have cover of at least 30K€ in the event of a claim.
If they do intend to ensure that in the event of a claim whose value is, for example, 5K€, that you should pay out 30K€ anyway, bear in mind that no insurance company would do that. It sounds wholly illegal.

To me, with legal experience of professional indemnity work, then there are two ways to understand what you have posted here:
- you have misunderstood
... See more
Perhaps you could check whether they mean that you must have cover of at least 30K€ in the event of a claim.
If they do intend to ensure that in the event of a claim whose value is, for example, 5K€, that you should pay out 30K€ anyway, bear in mind that no insurance company would do that. It sounds wholly illegal.

To me, with legal experience of professional indemnity work, then there are two ways to understand what you have posted here:
- you have misunderstood what is being asked
- the agency has an approach to professional indemnity that no insurance company would follow and/or which (almost) any country would consider as an illegal contractual term.

What should you do?
Ask the company to specify what they mean. In any event, don't sign unless and until you get a satisfactory answer.

Could you post a relevant extract of the NDA here?
Collapse


Morano El-Kholy
 

Tom in London
United Kingdom
Local time: 17:36
Member (2008)
Italian to English
That BB again Oct 29, 2018

"......extremely high reviews on the blue board"

means nothing. And how interesting to hear that they organise conferences etc.



[Edited at 2018-10-29 09:25 GMT]


William Tierney
 

toasty  Identity Verified
Italy
Local time: 18:36
Member (2013)
Italian to English
TOPIC STARTER
Here it is Oct 29, 2018

Hi Nikki,

Yes, of course, see below. To me it seems they mean "the translator must pay them no matter what":

The Collaborator/Freelancer undertakes not to perform any sales activities as regards the customers of the Company
(associated with the customer file registered with the AEPD and the service orders furnished by the Company), either
directly or indirectly through third parties or investee companies, for a period of 3 years from the completion of the
... See more
Hi Nikki,

Yes, of course, see below. To me it seems they mean "the translator must pay them no matter what":

The Collaborator/Freelancer undertakes not to perform any sales activities as regards the customers of the Company
(associated with the customer file registered with the AEPD and the service orders furnished by the Company), either
directly or indirectly through third parties or investee companies, for a period of 3 years from the completion of the
contractual relationship between the parties (by reference to the end of the last service order rendered to an End Customer
of the Company).
The total or partial breach of this point shall result in the obligation to indemnify the Company in the amount of €30,000,
as a penalty clause for breach and completely independently of the actual damage suffered or the accreditation thereof.
Collapse


 

Tom in London
United Kingdom
Local time: 17:36
Member (2008)
Italian to English
Bad English Oct 29, 2018

The English of that statement is very poor.

"Furnished" looks to me like a straight (and inaccurate) translation from "forniti".

Etc.

You certainly shouldn't sign a non-compete agreement (or any other legal agreement) that is a bad translation from another language !!!!!

[Edited at 2018-10-29 09:33 GMT]


Morano El-Kholy
toasty
Steffen Walter
Christine Andersen
Emily Scott
Angie Garbarino
Kuochoe Nikoi-Kotei
 

Steffen Walter  Identity Verified
Germany
Local time: 18:36
Member (2002)
English to German
+ ...
Completely unreasonable clause Oct 29, 2018

This non-compete clause is completely unreasonable because the outsourcer is trying to impose a business restriction on you for three years after the end of any contractual dealings with them, so it needs to be either deleted or substantially reworded. On a related note, the AEPD mentioned in the provision seems to point to a Spanish outsourcer.

[Edited at 2018-10-29 09:38 GMT]


Tom in London
toasty
IanDhu
 

Sheila Wilson  Identity Verified
Spain
Local time: 17:36
Member (2007)
English
+ ...
"Lawyering up" in action Oct 29, 2018

toasty wrote:
It's an agency that I met at a translation conference (one of the conference's sponsors no less) and they have extremely high reviews on the blue board.

That explains a lot. They are likely to be an enormous concern with loads of money and a team of lawyers who know that many of the suppliers they are dealing with know absolutely nothing about contracts or even about running a business. They're needy freelancers who will just do as they're told and hope it all works out all right.

Now that we can see the actual clause, I'm amazed that anyone would think of signing it. "Directly or indirectly"? How on earth are we to know if/when we've worked for one of their clients through another agency? We often have no way of knowing who the end-client is. Even if we're translating, say, BMW internal memos, we could be producing them for a rival company, a newspaper, a court, a past employee ...

I'm not averse to a sensible non-compete clause. In fact, I have had occasion to turn down clients in the past, even without such a clause, because I know they're simply trying to cut an agency out of the loop. It's tempting due to the higher rates possible, but it's unethical when the agency has put you in touch with the client. But the clause has to include "knowingly" and a time limit, and I prefer to let the courts decide what's a reasonable sum.


Tom in London
Steffen Walter
toasty
Christine Andersen
Morano El-Kholy
Teresa Borges
Dmytro Nehrii
 

Steffen Walter  Identity Verified
Germany
Local time: 18:36
Member (2002)
English to German
+ ...
Time limit Oct 29, 2018

Sheila Wilson wrote:

toasty wrote:
It's an agency that I met at a translation conference (one of the conference's sponsors no less) and they have extremely high reviews on the blue board.

That explains a lot. They are likely to be an enormous concern with loads of money and a team of lawyers who know that many of the suppliers they are dealing with know absolutely nothing about contracts or even about running a business. They're needy freelancers who will just do as they're told and hope it all works out all right.

Now that we can see the actual clause, I'm amazed that anyone would think of signing it. "Directly or indirectly"? How on earth are we to know if/when we've worked for one of their clients through another agency? We often have no way of knowing who the end-client is. Even if we're translating, say, BMW internal memos, we could be producing them for a rival company, a newspaper, a court, a past employee ...

I'm not averse to a sensible non-compete clause. In fact, I have had occasion to turn down clients in the past, even without such a clause, because I know they're simply trying to cut an agency out of the loop. It's tempting due to the higher rates possible, but it's unethical when the agency has put you in touch with the client. But the clause has to include "knowingly" and a time limit, and I prefer to let the courts decide what's a reasonable sum.


The clause at hand stipulates a time limit of three years after the end of the contractual relationship, which is far beyond any reasonable agreement.


toasty
Dan Lucas
Rachel Waddington
Sandra & Kenneth Grossman
IanDhu
 

toasty  Identity Verified
Italy
Local time: 18:36
Member (2013)
Italian to English
TOPIC STARTER
agreed! Oct 29, 2018

Hi Steven, the outsourcer is indeed located in Spain. Thank you so much for your response.

And thank you Sheila, agreed. I've edited the clause to be reasonable (removing that 30K entirely, adding 'knowingly', removing 'indirectly' and updating to a shorter time period, etc).

Let's see what they say.


Sheila Wilson
Tomasz Sienicki
IanDhu
 

Steffen Walter  Identity Verified
Germany
Local time: 18:36
Member (2002)
English to German
+ ...
Time period Oct 29, 2018

I would even go so far as to say that any non-compete period in excess of your contractual relationship with the outsourcer might be considered unreasonable for a freelancer as opposed to a salaried employee.

Sandra & Kenneth Grossman
Eliza Hall
IanDhu
 

Samuel Murray  Identity Verified
Netherlands
Local time: 18:36
Member (2006)
English to Afrikaans
+ ...
Although €30 000 is less ludicrous than nothing... Oct 29, 2018

toasty wrote:
In case of full or partial breach ... the contract specifies the translator has to indemnify the agency €30 000 regardless of actual damages. ... This seems ludicrous to me.


The agency limits the indemnity to €30 000 (as opposed to unlimited indemnification). The agency is saying that they will pay for all amounts above €30 000 themselves, which is very kind of them, but it's still too much. If you don't have a spare €30 000 lying round, you can't in good conscience sign this agreement. You should only agree to something if you have the resources available to honour the agreement.

toasty wrote:
...associated with the customer file registered with the AEPD and the service orders furnished by the Company...


Do you have access to the AEPD database entries w.r.t. the company's clients? If not, then it would be dishonest of you to agree to this.

toasty wrote:
I've edited the clause to be reasonable (removing that 30K entirely...)


If you remove the limitation on the indemnification, then you are changing a limited indemnification into an unlimited indemnification, i.e. you'd be liable for all costs, not just the first €30 000.


[Edited at 2018-10-29 09:55 GMT]


 

toasty  Identity Verified
Italy
Local time: 18:36
Member (2013)
Italian to English
TOPIC STARTER
sort of Oct 29, 2018

Samuel Murray wrote:

The agency limits the indemnity to €30 000 (as opposed to unlimited indemnification). The agency is saying that they will pay for all amounts above €30 000 themselves, which is very kind of them, but it's still too much. If you don't have a spare €30 000 lying round, you can't in good conscience sign this agreement. You should only agree to something if you have the resources available to honour the agreement.



Well..not really. They are saying even if the damages are only 5K that I still have to pay 30K...It's simple penalty for the breach of the clause, not a compensation for damages.

But maybe you were being ironic?

Good point about the AEPD database too, thanks!

[Edited at 2018-10-29 09:58 GMT]


 

Steve R.
United States
Russian to English
Highly doubtful it would be enforceable...but still. Oct 29, 2018

It could just be boilerplate. No one ever reads a contract within the company after its first few distributions; that is, until the shocked recipient redlines the hell out of it.

 
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