Enforcability of a Non-compete clause?

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Postby Guest » 10/27/04 12:46 PM

I thought I'd toss this one out...

I'm currently being asked to sign a contract that has a non-compete clause. Now I don't mind being asked not to perform anywhere within a reasonable distance and for a reasonable amount of time within my performance dates, but this contract states that I'm not to perform at any similar venue within 100 miles from the time the contract is signed (which will be 4 months before the performance dates) until 420 days after the last performance.

This seems a little unreasonable.

Now I'm pretty sure that there won't be a similar venue within the 100 mile radius, but is this asking too much?

I've never seen a non-compete clause like this, and was wondering if it was "standard." As to the enforcability, I'm guessing that it's enforcable to the extent that if I sign it, I'm liable. On the other hand, if I don't sign it, I don't work.

Any expert opinions out there?

Chris
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Postby Curtis Kam » 10/27/04 01:18 PM

I assume you're talking about a contract entered into and/or performable in Florida. You'll need the opinion of an attorney licensed in Florida to give you an answer you can rely on. I'm not licensed there.

In general, however, covenants not to compete are only enforceable to the extent that they are commercially reasonable in terms of geography, scope, and time.

The 100 mile radius may be reasonable, depending on how densely packed your other prospects arein that area.

The 4 month/ 420 day time span may be reasonable, but seems a bit overbroad, not knowing more.

The "scope" refers to the types of things you agree not to do: i.e. the same act that you provide under this contract, or any other magic act, or is it any performance at all, or any work at all?

Keep in mind that the "reasonableness" of the limitations depends on the potential harm that the other party is trying to avoid. If they can't state what harm might occur from a performance 99 miles away, it's hard to say that's a reasonable restriction.

Those are the basic considerations. In all likelihood, however, your decision will be made onother grounds, having to do with how badly you want this gig, and whether anyone will really be damaged enough to justify legal action.

Good luck.
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Postby Bill Mullins » 10/27/04 01:33 PM

I hope you aren't planning on signing it and then breaking it. Regardless of whether a clause like that is enforceable, it doesn's say much for a performer that would intentionally take a customer's money under a specific set of circumstances, and then violate the agreement after the fact.

If the clause bothers you, ask the booker why it is in there and what can be done about it.
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Postby Jacky Kahan » 10/27/04 01:42 PM

is this contract for a product launch?
I'm not a lawyer but it doesn't make sense if it's for a "standard" show...

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Postby Guest » 10/27/04 02:37 PM

I don't know about performing but I've know people who quit high tech jobs and just refused to sign a non-compete. What is the circumstance that they would want you to not perform w/in 400 miles? Seems rather odd.
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Postby Guest » 10/27/04 03:44 PM

Do try to talk with them, it does sound a bit unreasonable. The 4 months prior is ok, after all, how big the market can be to support multiple shows by the same person within the 4 months. But the 420 days after the show? That you should scrape to a more reasonable 180 days, or perhaps even 90 days. Given that you cannot be marketed within that time period either.

Usually when non-competitive clauses or contracts are signed when companies are sold they have a premium correlating the stricktness and time span of the contract. That is, you should get a reasonable extra remuneration for the 420 days you cannot perform in the area. If you believe you could have two shows between the 180 days and 420 days then you should get paid for those.
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Postby David Alexander » 10/27/04 07:51 PM

If I recall correctly, at one time Ed Sullivan had a clause in his contracts for certain acts that appeared on his show...you could not perform on another TV variety show for a period of time before and 90 days after you did his show.

To be barred from an area for 420 days after a peformance seems excessive. Unless I was being paid a good enough fee to preclude business in that area for over a year, I'd pass if the booker doesn't want to negotiate into something more reasonable...or want a percentage of bookings gained from your exposure there.
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Postby magicam » 10/28/04 08:36 PM

Generally, non-compete clauses can be enforced. I'd add to Curtis' comments that your fee is a factor as well in determining reasonability. If they paid you $5M not to perform for that period of time and your typical annual revenue is, say, $100K, a court might think such a clause very reasonable indeed.

Comments by the others on this thread seem on point. Frankly, unless the money was really good, I'd only agree to a very short (weeks?) post-performance non-compete period. To my mind, the question is one of advertising for that period, not actual performance. How can sales of tickets for the event you're doing be hurt if the prospective audience doesn't know you're going to perform again locally? Maybe, then, it's really a matter of promising that you won't advertise any upcoming performances until after you do that show.

One other thought: depending on what's in your act and how unique it is, you can ask the people who drafted this contract why others can perform the same tricks in the area but not you. The reasoning of a post-performance non-compete in this circumstance is that people would not go to this particular show of yours because they know they could go to another show the next week (this ties into my point about advertising) above). But if others in the area are doing "similar" acts (i.e., assuming you're not the "only game in town"), then in a way it kind of defeats the purpose of a non-compete, no?

Good luck with your negotiations.

Clay

P.S. Unless the venue is in a really rural area, the 100 mile radius clause seems outrageous.
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Postby Frank Starsinic » 10/28/04 09:42 PM

I think you should try to negotiate.
Just change to it so it looks agreeable to you and turn it into them.

I'll bet they say,... "sure. that's fine".

I did that last spring. Just made changes, signed it and sent it back. And notified them of what I was doing. It was no big deal.

Sometimes they don't put much thought into the contract. They just keep using the same one for everybody even if it doesn't make sense.


It's worth a shot.
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Postby Bill Palmer » 11/29/04 07:03 PM

You would have to check Florida precedent. There was a case in Houston in which the non-compete clause was, in the opinion of all parties except the performer, quite reasonable. But the contract was declared unreasonable.

It concerned a local TV newscaster who had a big following. He went directly from one news station to another in exactly the same market. When he was sued, he won the case.

But that's Texas. It's not Florida. And if the non-compete area is the one where you live, it's also unreasonable.

Consult an attorney.

Or send me the gig. I don't live in Florida. It won't bother me at all ;)
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Postby Guest » 12/03/04 07:38 PM

Protection of intellectual properties through trade secrets and linking them with non-competes has long been a sales tool with IP companies.

A blanket non compete WITHOUT specific intellectual properties, styles or trade looks would indeed be rather daunting. Non-competes must, under law, generally not reasonably prevent an individual from practicing his trade -- if that trade was in place before the new "employer" brought the person on board, and iuf the individual does not use or reveal trade secrets (client lists, specific tricks, proltected means and methods.) Reasonable iin must cases adds up to a one hour drive and 180 days without direct and specifically enumerated compensation methiods being spelled out in the contract.

One favorite method (as an employer) used to prevent competition is to allow it -- but for a time certain -- a fee for any compensation earned by the competing individual (say 50-75 per cent of the sum earned) must be paid to the original employer as commission and the books of the new competition must be open to the original employer for a time certain (180 days) to ensure no "conversion" of clients (a tort in itself) is made by the former employee. These can be contractually demanded as part of a fair and open method of controlling immediate competition for a time period.

I would think the limitations on what part of your trade you would learn -- and then possibly compete in after the contract ends or is terminated -- would also be important. For a nightclub magician, for instance, not to be able to do kids parties would be insane. To appear in a nearby trade-show hired by an out of town NON CLIENT of the original employer would be an exemption I would ask for.

And if you have any idea of actually going into competition with the venue in the first place -- get busy and do it before workoing for them. Your own intiative and pluck cannot be questioned when you do not steal ideas, methods and means from a previous employer...or even give the impression you have used them to forward your own career at their expense.
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Postby Pete Biro » 12/03/04 08:26 PM

Ivanovich... it has been some time since you first posted, yet you have not responded, or added any information.

What's up?
Stay tooned.
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Postby Brian Morton » 12/03/04 09:45 PM

Hey, Pete...

Ivanovich recently had some computer troubles (as in, his got stolen), but he'll be posting re: the non-compete as soon as he can get his account set up again...

brian :cool:
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Postby Guest » 12/06/04 11:20 AM

Yow! I made it!

As Brian mentioned, my computer was stolen. And that means that I lost access to the password for this board. Unfortunately, my e-mail account was trashed as well, so I couldn't log into it to get the password mailed to me. But now everything is back up and running, and I'll fill you in on the denouement...

I spoke with the booking/contracting agency about the "non compete" clause in the contract, to see exactly what they meant about not doing a show at a similar venue. By "similar" they meant doing the exact same show that I was doing for them in the exact same type of venue. And there are currently no plans for any such venue to be available within that time frame in the restricted area. So I was covered.

But, more importantly, the owner of the show told me that if I had any problem with that clause I should just cross it out and initial the change and it wouldn't pertain to me.

Not bad. And certainly worth asking about.

Thanks for the interest, gang. I appreciate the support.

Chris Ivanovich
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