Legal Question in Employment Law in Delaware

Important bits:

- I provide services to 3rd party clients through CompanyX, which pays and employs me as a freelancer.

- Company X is incorporated in Delaware, headquartered in California

- The situation in question now regards a 3rd party whose contact with Company X is being rescinded due to the inability to agree to hourly rates (a problem caused mostly by the USD to AUS$ exchange rate)

- I am an American citizen legally residing in Europe

- Every good faith effort was made to accommodate the situation by both myself and the client.

My question is, if the company I work for is the one terminating their relationship with the 3rd party is the clause below legally enforceable?

I would see merit in the clause if the client and I conspired to circumvent the clause but in this case since it's CompanyX rescinding the client can they still maintain that I not be able to work with them?

This is the clause in question .

g. Non-Circumvention.  As additional protection for the proprietary rights of CompanyX including any Proprietary Information, Talent indirectly encourage or solicit any employee or consultant of CompanyX or any Client to leave CompanyX or such Client for any reason, or (ii) other than providing the Work under this Agreement, enter into an employment or consulting relationship with or otherwise engage with or perform services for any Client to whom Talent was introduced or referred in connection with this Agreement (whether or not Work  was  performed)  without  CompanyX�s  prior  written  consent,  or  (iii)refer  ANY  developers,  engineers  or  technology  related professionals  directly  to  Client.IN  THE  EVENT  OF  ANY  BREACH  BY  DEVELOPER  OF  THE  FOREGOING,  DEVELOPER WILL PAY CompanyX AS LIQUIDATED DAMAGES THIRTY THOUSAND DOLLARS ($30,000) FOR EACH SUCH BREACH WITHIN TEN (10) DAYS AFTER EACH SUCH BREACH.   DEVELOPER AND CompanyX HEREBY ACKNOWLEDGE AND AGREE THAT CompanyX'S DAMAGES IN THE EVENT OF EACH SUCH BREACH WOULD BE DIFFICULT OR IMPOSSIBLE TO  DETERMINE,  THAT    $30,000  IS  THE  PARTIES'  BEST  AND  MOST  ACCURATE  ESTIMATE  OF  THE  DAMAGES CompanyX WOULD SUFFER IN THE EVENT DEVELOPER BREACHES THE FOREGOING, AND THAT SUCH ESTIMATE IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT.  Without limiting the foregoing,Talent  may  perform  services  for  other  persons;  provided  that  such  services  do  not  conflict  with  or  breach  of  Talent�s obligations under this Agreement or otherwise.


Asked on 5/11/16, 2:32 pm

1 Answer from Attorneys

Roman Fichman Esq. Law Practice of Roman Fichman Esq.

If this is an agreement between company X and the client, unclear what is your liability?! In addition, liquidated damages clauses are generally very problematic and are often narrowly interpenetrated. Finally, there seems to be a non compete reference which similarly invites many problems if not properly drafted.

Often times a poorly drafted liquidated damages and non-compete clauses are a tell tale sign of other issues with an agreement. If you are involved in this agreement you should have an attorney review it. Such a review is not costly.

Please contact me directly.

Roman R. Fichman, Esq.

www.TheLegalists.com │ @TheLegalist

email: Info (@) TheLegalists (dot) com

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Answered on 5/11/16, 3:31 pm


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