As a contractor, you may have come across the term “restrictive covenant” in your agreement with a client. A restrictive covenant is a legal clause that limits your ability to conduct business with other clients or competitors after the contract ends. These clauses are designed to protect the client`s interests and may also be referred to as non-compete or non-solicitation agreements.
A common example of a restrictive covenant in a contractor agreement may prohibit you from working with the client`s competitors or soliciting their clients for a certain period of time. This clause is meant to prevent the contractor from using the client`s confidential information or trade secrets to gain an unfair advantage in the market.
While restrictive covenants provide protection to the client, they can also limit the contractor`s ability to work with other clients and earn a living. Therefore, it is important to review these clauses carefully before signing a contract.
If you are presented with a restrictive covenant in your contractor agreement, here are some key points to consider:
1. Scope: Review the scope of the restrictive covenant and ensure that it is reasonable and limited to the client`s legitimate business interests.
2. Duration: Verify the duration of the restrictive covenant and ensure that it is not excessively long or indefinite.
3. Geographic location: Check the geographic scope of the restrictive covenant and make sure that it is not overly broad or unfair.
4. Compensation: Consider whether the client is offering reasonable compensation or other benefits in exchange for the restrictive covenant.
5. Legal advice: Seek legal advice from a qualified attorney to ensure that the restrictive covenant is enforceable and does not conflict with any state or federal laws.
In conclusion, restrictive covenants are common in contractor agreements and are designed to protect the client`s interests. However, it is important for contractors to review these clauses carefully and seek legal advice if necessary to ensure that they are fair, reasonable, and enforceable.
