Challenge abusive clauses
How many of the agreements and contracts that you’ve signed with your clients have you actually read? Be honest, if you’re anything like me, you’ll have let at least one or two slip through with a cursory glance and a hurried scrawl across the bottom. After all, it’s only boring red tape, it can’t really be important, can it? Well, sitting down and actually reading one of these agreements recently before I signed it brought home to me just how wrong and how dangerous that attitude can be.
Buried away in the middle of the innocuous looking contract were clauses that could have left me virtually bankrupt for absolutely innocent and normal behaviour. The problem was, and often is in these cases, hidden in a section entitled, in Spanish, “Prohibición de Competencia” or “Ban on Competition”. This insisted that I must not, while working for the agency in question under the contract and for a year afterwards, work for any of its clients whatsoever, either on my own behalf or via a third party, performing the same services as it performed. It’s so astounding it needs a minute or two to thing about. Because how was I supposed to know who this agency’s clients even were? I would presumably know the ones I’d indirectly worked for, but the contract made it clear it applied to each and every one of the agency’s customers. That meant if I did a job either myself or working for another agency for one of these clients, even if I was absolutely unaware of their link to the agency, I’d be guilty just the same. Warning bells began to ring.
But the danger ran even deeper. I was not even allowed to approach these clients, whether I knew of them or not. without the prior, written consent of the agency. So I could find myself in breach of this ludicrous clause merely by making a perfectly innocent approach to a potential customer. All this was bad enough, but then came the killer punch. If I did breach these clauses of the contract I would be liable to pay the agency double the amount I’d earned from it during the course of the agreement or the enormous sum of 50,000 euros, whichever was the greater.
Now, I don’t believe non-competition clauses are necessarily unreasonable in themselves and I don’t dispute an agency’s right to cover itself against an unscrupulous translator stealing its clients. But in this case the penalty seemed absolutely out of proportion, particularly as it could be incurred without any kind of intent. On top of that, bearing in mind where the agency was based and the areas it appeared to specialise in, it appeared quite likely that I would, at some point or other, approach its clients.
So what was I to do? Here was a potential customer for me I was interested in working with; we seemed compatible in all kinds of ways, and yet I was suddenly faced with this insurmountable obstacle in the shape of an unsignable contract. In fact, recognising it as absolutely unsignable was the first step. However much I wanted the client, bearing in mind the likelihood that I would accidently infringe the non-competition clauses and the crippling penalty involved, the risk was simply too great.
I decided to explain the situation and ask the customer to change the agreement, somewhat apprehensive of the possible reaction, but also determined that if the clause wasn’t changed I would simply have to walk away. In fact, the response surprised me, as I had imagined that anyone wanting to impose such draconian conditions would be difficult to deal with. In fact the reverse was true. “We understand. Write your own clause.” was not quite what I’d been expecting. But I drafted something I could agree to, reducing the penalty considerably and making sure the prohibition was restricted to the agency’s clients I knew of. It was accepted without question.
A positive result, then, although it does beg the question of what the agency thought it was doing including such excessive clauses in what should have been an ordinary contract. I can only assume I was the first to challenge them. Because there are bound to be plenty more out contracts like this one out there, my advice is to bear the following checklist in mind next time you’re asked to sign some sort of agreement.
1. Make sure your read the whole contract.
2. Pay particular attention to potentially risky clauses, such as those concerning non-competition.
3. Identify anything you might be unhappy with.
4. Read those parts again. Does it really say what you think it says? If in doubt, ask the client.
5. Quantify the risks. Are you likely to breach the contract? Could you breach it by accident? If you do, are you likely to get caught? Are the penalties reasonable and proportionate? How would they affect you?
6. If, having considered these things, any part of the contract is unacceptable, tell the client politely but firmly.
7. Be prepared to be specific about what you object to and to suggest an acceptable version of the clause you dislike to deal with the same underlying concern in a more reasonable way.
8. Be ready to walk away if the client refuses to budge. You are better not working for someone who insists on holding you to an unreasonable agreement.
And, finally, remember the version of Murphy’s Law which says that the work you will receive from clients is inversely proportional to the amount of paperwork and formfilling they insist on. So far, the customer of the ridiculous competition clause has sent me precisely nothing to do…
Have you had experience with unreasonable contracts or agreements? What was your solution? Have you ever been caught out by this type of clause? What happened? Please leave a comment and let me know.
I am one of those people who read every contract carefully (including Terms and Conditions) and I have challenged and changed clauses at times. I believe any sort of contract must be beneficial for both parties involved, not just for one.
Thanks, Alina. That’s certainly what everyone should do, but the recent experience I described really brought it home to me.
Hello Simon. If I’m sent a contract with a clause I think is a bit unreasonable, I edit it, sign and send it back. (If I think the clause is grossly unreasonable, I’d just bin it – why would I want to work with a grossly unreasonable client?) The client so far has always accepted the edited version; if they didn’t, I’d walk away.
In this case, I’d simply have edited the clause to say I wouldn’t approach or work with people that I already knew were their clients, which is probably all they wanted anyway.
Thanks, Oliver. I think in this case it was pure thoughtlessness. They’d probably had the contract drawn up by a lawyer who hadn’t thought about the practical implications and may not even have read it properly themselves. The problem is this kind of thoughtlessness, if we don’t catch it, could prove very expensive.
I think I know who you mean. He was nice on the phone, although the job he contacted me for fell through.
When I saw the contract I was shocked because I had never seen anything like it in 25 years in the profession. I considered challenging it but reckoned that, with such a mindset, he would probably have other things up his sleeve. If an "innocent" template error, then I wondered what other short-cuts had been taken and have a knock-on effect.
I’ll find out soon. I recently did my first job for the agency but it’s too soon to say how they are about paying, etc.