hello experienced consultants. I am an experienced professional, but a rookie consultant operating on my own. I just sent a deal off to my first potential customer, and they came back and asked for exclusivity/non-compete. I obliged and drew up a document - probably not a great idea. I am now learning the reason they asked for this was because what I was offering was perceived as very valuable. Duh - ::facepalm::
Now I am wanting to back out. The contract I sent wasn't signed. It was meant to be a working document. But they pushed it to their legal.
What do I do in this situation?
You did not sign the document, right? Maybe you can tell them that you can just sign a non-disclosure agreement instead of a non-compete agreement. I'm just not sure if this can push the client away, but you mentioned that what you are offering is perceived as very valuable. What's the duration of the non-compete agreement and what will be the duration of your project with this company?
I did not sign anything. I sent them unsigned paper...it was meant to be a suggestion. My experienced buddy told me this was a party foul. Basically agree in principle without writing anything down. That they will see my backing out as gaming them and I'll look like an arse.
2 months to implement, their option to lock the source code up for 3 years after that, in a predefined set of 10-15 states (it is a geographical analytics tech). My lawyer basically said that 3 years was WAY too long, and that I am an idiot and that the number of states I quoted could be selected ("gamed") such that they could restrict the entire US by picking every other state.
Don't worry about the party foul. Yes, in most cases, its generally more normal to hammer out some terms in a conversation and paper them up once finalized. But there's enough variance that nobody is going to apply a blanket "this guy must be an amateur" because you did it differently.
Did your lawyer say 3 years is too long from the standpoint of noncompete law, or from a business strategy standpoint (e.g. the value of your work would diminish after, say, 2 years and thus 3 years is a bad strategic point for you because of opportunity cost). Basically can you elaborate on your lawyer's thinking there.
Same thing on the gaming question. I haven't heard of a situation with noncompetes where restricting you in 15 states can then be used against you elsewhere, unless they had some sneaky other term in there that they can abuse.
Interesting situation, I'm a former lawyer and happy to comment, obviously I need to state for the record that this is not official legal advice and I am not currently licensed. At first glance it seems to me this is a pretty normal deal where a client wants exclusivity over your work product and the the biggest concern isn't getting the legal terms right (normal deal = terms will be handled) but rather making sure you're aware of the commercial value of your work and that the exclusivity is properly compensating you.
If the client requires you to be under an agreement like this THEY should be the one producing the first draft of the document, not you.
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