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- The situation in question now regards a 3rd party whose contact with Company X is being rescinded due to the inability to agree to hourly rates (a problem caused mostly by the USD to AUS$ exchange rate)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.
1 Answer from Attorneys
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
t e l : 2 1 2 -- 3 3 7 -- 9 8 3 7
Disclaimer: This post has been written for educational purposes only and was not meant to be legal advice and should not be construed as legal advice or be relied upon. No intention exists to create an attorney-client relationship or any other special relationship or privilege through this post. The post may contain errors, inaccuracies and/or omissions. You should always consult an attorney admitted to practice in your jurisdiction for specific advice. This post may be deemed as Attorney Advertising