December 5, 2011
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Question
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Ken:
We are interested in a non-compete sub-contract agreement whereby our third party individuals or companies are bound to adhere to our company standards and not able to take over our clients by being in their workplace. Which one of your contracts would be appropriate?
Thank you.
Michel R
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Answer
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When one alarm company sub- contracts work to another alarm company neither company would expect the sub contractor to compete against the hiring company. Makes sense. It also makes sense to express the terms of the sub contract in writing, including provisions for non compete. It avoids later confusion. Also puts some teeth into dealing with uncivilized improper conduct by the sub contractor.
Normally you don't put a bag over your sub contractors head and take him to the job site, though I suppose that's one way to handle the situation. More likely your sub-contractor is given all your subscriber information and in fact may get to know your subscriber and the system better than you do.
What restrictions against competition can you have and what is reasonable? You can compose your contract to meet your needs. Your sub contractor should not be able to compete in any way with your business. That will extend from solicitation to providing any service - whether you do it or not. Your sub contractor installed an alarm system for you. You don't do telephone. Your sub contractor solicits the telephone work for itself. How are you hurt? A problem with the phone installation will end up on your front door because you introduced the sub contractor. Of course improper competition rarely ends with work that the hiring company doesn't do.
The Standard Form Sub Contract Agreement contains an simple yet broad restrictive covenant. No competition, starting with soliciting and extending to providing the service. Your subscriber contacts and information are your property and should be treated confidentially and proprietary.
Pretty much the same analysis applies to employees, and the same provisions are found in the Standard Employment Contract.
In a buy - sell agreement you also should be expressing restrictive covenants. These are customized to meet the particulars of the agreement but always include at least the accounts that are sold under the agreement. When in doubt check with a good lawyer. You have our number. And if not, call Jennifer Kirschenbaum, Esq [516 747 6700 ext 302] with your transactional questions.