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I have received a Consulting Agreement in the middle of a project.

I live in Cambodia.

The NON-COMPETE clause in question

During the Term of this Agreement and 05 (five) year thereafter, the Consultant shall not engage, directly or indirectly, in any capacity, to be in any competition in the Client or any of its subsidiaries, including any company engaged in the business which is in competition with the Company's business.


Clarifications from comments

@Greendrake Need clarity as to which party is Client and which one is Company. Are they the same thing? Which one do you work for?

Company refers to the CEO and his company. I have read the whole contract and "Client" only appears once in that NON-COMPETE.


My Questions

  • The market is small for the services I provide. Only banks are willing to pay for the services. Would this clause prohibit me for offering this service to anyone outside the current company I'm working with?

  • The CEO, with his lawyer have tried to convince me that this only apply to current client and any past clients that I have work on. Is this true?

  • If I start my own company, this would also apply to me right? Even if I start a company that provide online courses and don't offer services, this will still apply?

  • Would this make it impossible for me to take any job from any company in the country that provide this service?

  • From your view, how fair is this? Should I expect the CEO to offer a fair contract or is this something you read and negotiate? (This service has nothing todo with legal matters and I'm not expected to be good in legal matters)


Country size: around 15 million people

market: Only the capital, with less than 50 clients.

  • Need clarity as to which party is Client and which one is Company. Are they the same thing? Which one do you work for? – Greendrake May 31 at 6:57
  • Hey @Greendrake Company refers to the CEO and his company. I have read the whole contract and "Client" only appears once in that clouse. – Mateusz Rybin May 31 at 7:05
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    Yikes. Don't sign this "as is". This extremely restrictive and one-sided. NDA and non-compete laws vary A LOT with location, so it's hard to tell whether this would be actually enforceable or even legal. Consider adding a country tag. – Hilmar May 31 at 14:19
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The CEO, with his lawyer have tried to convince me that this only apply to current client and any past clients that I have work on. Is this true?

No. It will be true only if they make that clarification in the clause or a properly added amendment. The clause currently has no indication that it is limited to "current client and any past clients that [you] have work[ed] on".

The CEO's & lawyer's refusal to amend the clause so as to make it consistent with their attempts [to persuade you] would be a red flag. Their inconsistent representations to you suggest that they are not planning to honor the covenant of good faith on which all contracts are premised.

Should I expect the CEO to offer a fair contract or is this something you read and negotiate?

You should require a contract that seems fair to you. And by "to you" I mean that it has to be in line with your expectations regardless of the average conditions in the labor market.

Negotiations are not binding. They are merely a preamble to a contract, and that contract is binding. This is why you should reject a contract that falls short of your requirements.

Some clauses are unlawful and/or void and unenforceable as unconscionable or for contravening legislation (unlawful clauses can and do arise even if drafted by attorneys). Thus, although you might not have to worry about those clauses in particular, the company's mere attempt to include them in a contract should alert you of the high risk of ending up with other abusive terms & conditions which are binding and enforceable nonetheless.

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Provided that the agreement is enforceable in your jurisdiction (which it well may not be as per the comments underneath):

Would this clause prohibit me for offering this service to anyone outside the current company I'm working with?

Yes.

The CEO, with his lawyer have tried to convince me that this only apply to current client and any past clients that I have work on. Is this true?

No.

If I start my own company, this would also apply to me right? Even if I start a company that provide online courses and don't offer services, this will still apply?

Depends on whether you compete or not (and this depends on the details of what the Company does and you would do).

Would this make it impossible for me to take any job from any company in the country that provide this service?

Yes. That would indirectly engage you to be in competition.

From your view, how fair is this? Should I expect the CEO to offer a fair contract or is this something you read and negotiate?

Fairness and legality are apples and oranges. The CEO wants too much and tries to trick you into signing it. Stand your ground and offer your own draft.

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  • Without knowing which country OP is operating in, it's not actually possible to provide these answers. For example, the Lithuanian Civil Code only allows non-compete clauses for 2 years, which would invalidate at least the 3 of the 5 years of this clause's duration as disproportionately restricting a person's Constitutional right to choose his or her job or business. Similarly, it is possible the restriction from working in "any" capacity would be deemed too restrictive, as well. – A.fm. May 31 at 10:17
  • @A.fm. I doubt that the Company's lawyer would put 5 years in there if only 2 were allowed. What's the point, especially that it makes the OP concerned? – Greendrake May 31 at 10:38
  • There's not much reason to doubt that, regardless of whether it was purposeful or not. That said, mentioning the 2 year limit on duration in Lithuania was simply an example of ways in which non-compete clauses may be limited by a jurisdiction's laws. – A.fm. May 31 at 11:15
  • @A.fm. I think one can reasonably safely assume that the drafted agreement is fully enforceable in whatever jurisdiction is was done so because the CEO engaged a lawyer. This makes the question abstracted from jurisdiction and boiling down to mere interpretation of the agreement. – Greendrake May 31 at 11:22
  • There's actually no reason to assume that. One article I found from 2010 says that in OP's country, non-compete clauses are not necessarily enforceable. Article 70 of the Labor Law states "any clause of a contract that prohibits the worker from engaging in any activity after the expiration of the contract is null and void." This report from 2019 does suggest, however, that in practice, such clauses are commonly used in employment contracts. ela.law/Templates/media/files/PUBLICATIONS/… – A.fm. Jun 1 at 4:55

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