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  1. #1
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    Jan 2011
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    Default Non-Compete Violation by a Sub-Contractor / Supplier

    My question involves business law in the state of:GA

    We are a Small Business firm incorporated in the State of GA, offering Information Technology Staffing services to Clients in both Public and Private Sector. We would like to clarify some details that needs immediate attention involving one of our sub-contractor / supplier.

    We have engaged Consultant who has his own firm based in the State of WI and as a supplier he has signed a Agreement with our firm that has a Non-Compete clause as mentioned below:

    "The Supplier agrees not to compete with our firm in providing staffing or services in any capacity (either directly or indirectly) to Client for a period of one (1) year from the date of introduction or one (1) year from the last day of services provided, whichever is later. During this period, the Supplier will not directly or indirectly, or in any capacity, compete or attempt to compete with our firm to provide services to the Client."

    He has been working under our contract for 18 months and now before the completion date of our contract, the opportunity for an extension was released by the Client. While being on our contract, he chose to represent another firm (our competitor) and let them submit his profile to our Client thus violating our agreement terms.

    Next week, one of his invoices is due for payment. As he and his firm has violated the current contract agreement terms, can we put a hold on the payment, until this issue is resolved? Kindly let me know.

  2. #2
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    Default Re: Non-Compete Violation by a Sub-Contractor / Supplier

    Assuming for the moment that there was a breach, what damages (financial loss or injury) did you suffer as a result?

  3. #3
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    Default Re: Non-Compete Violation by a Sub-Contractor / Supplier

    Thank you for the response. The contract she is pursuing thru our competition firm will have a revenue of $175,000. It also has a potential of extension project valued at another $175,000.

  4. #4
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    Default Re: Non-Compete Violation by a Sub-Contractor / Supplier

    The Client (in Atlanta, GA) has confirmed today that he has been selected for the project. When we asked them to confirm the name of the Consultant and firm (competitor), they gave it in writing.

    The purchase order was in effect in Dec until 12/31/2010. The Consultant has breached the contract on 12/29/2010 and we have written confirmation from the Client. Also on that date (12/29/2010) he was working for the Client under our contract. It is not clear if we are still obligated to pay Dec 2010 invoice? Is there any provision to dispute this situation?

  5. #5
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    Default Re: Non-Compete Violation by a Sub-Contractor / Supplier

    The fact that he secured a contract does not of itself translate into damage to you. What evidence do you have that you would have secured the contract but for your supplier's violation of the noncompete?

    Keep in mind, we only know what you tell us.

  6. #6
    Join Date
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    Default Re: Non-Compete Violation by a Sub-Contractor / Supplier

    The Client prefers the consultants to work with one vendor. Since this consultant representing our firm has been working for our Client for more than a year, the client has issued two extensions to our firm in the past. The rate amount is set by the Client and not us. Now when the 3rd extension was due, the Client had decided to reduce the rate. When a rate change happens, their system cannot directly extend the contract to the existing vendor. They will re-release the position. However they will select the previous firm / consultant who was working for the project. The client has a prior history of this practise.

    We having the non-compete in place with the consultant for set duration (1 year) for this specific Client location / project that he/she should not violate. Having violated now, it is a huge loss of revenue to our firm.

  7. #7
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    Default Re: Non-Compete Violation by a Sub-Contractor / Supplier

    If you think you can prove that they cost you the profits of a $175,000 contract, you should discuss the specifics of your claim with a business litigation attorney.

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