Dear Danielle: Client Wants Me to Provide a Non-Compete Agreement

Dear Danielle:

I have a new client who wants me to sign a non-compete agreement. Do you know where I can find one that will work? –SC

HALT!!! Sweetie, don’t do another thing until you read this post!

You NEVER, ever want to sign a non-compete agreement. You are a business owner and you are in business to work with more than one client. Signing a non-compete agreement, especially those poorly written generic ones that far too many people buy at their local office supply store (or worse, the freebies found on the Internet), could effectively and potentially put you out of business.

You ALWAYS want to consult with an attorney in legal matters like this, and never sign any agreement of this nature before you do (which, personally, I recommend you never do; it has no place between two independent business operators), and especially in cases where you don’t realize the legal ramifications and rights you may be signing away.

Now, your client may be talking about some kind of confidentiality/non-disclosure agreement (just using the wrong terminology), something to protect his or her proprietary business information and intellectual property that you may have access and become privy to while working together. That, of course, is perfectly reasonable. In fact, you may have your own proprietary information and trade secrets you want to protect and want to have clients sign your NDA as well.

However, it is not your role to provide legal documents of that nature to clients on their behalf. That is something every business owner must do themselves, consulting with their own attorneys. When they want to protect something in their business, they provide the documents to you. And vice versa.

In the case of subcontracting for colleagues, there are reasonable expectations that you are expected not to market to nor steal their clients. But there is specific language for that that an attorney can and should look over or provide so that you aren’t signing some kind of blanket non-compete that asks you not to do business in certain areas or do the work you do for a certain period of time. That’s what you do not want to be signing away or agreeing to as, again, you are a business.

This is an area of business law you need to bone up on if you are going to be a smart, responsible, knowledgeable business owner. And it’s an example of an area you may often need to educate clients in as well (when they ask you to do things that just aren’t your responsibility to do).

Hope that helps :)

4 Comments Posted in Best Biz Practices, Clients, Confidentiality, Dear Danielle, Legal. Bookmark the permalink.

4 Responses

  1. Marchelle Dunston says:

    thanks or the info…I didn’t know this. All of your information if very helpfull. Things are starting to look up for me. I hope to become a member of the VA Chamber of Commerce very soon. I look forward to becoming a part of your team.

  2. Julia says:

    Based on this article you do feel that it is okay to sign an NDA (Non Disclosure Agreement), just not a Non-Compete. Is this correct? I have a client who wants me to sign a NDA and it seems reasonable to me, but I would love to hear what you have to say about it.

  3. Oh, absolutely. It’s acceptable and common to be asked to sign an NDA by a client. When you are working in the belly of their business and may become privy to trade secrets and such, it’s perfectly natural for them to want to protect their interests. It’s also perfectly acceptable for you to have clients sign your NDA as well if you decide you have proprietary systems or any other intellectual property you don’t want them sharing or appropriating for themselves. But as usual, it’s always, always recommended that you have your attorney look over anything first before signing. You want to be sure you aren’t agreeing to something or signing away any rights or remedies you don’t intend. It’s a pain, but contracts can be tricky and it’s better safe now than sorry later.

  4. Julia says:

    Thanks so much for commenting back so quickly. It is very helpful to have someone like you and your company out there supporting the VAs!

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