Restriction on sub contractor

This query is : Resolved

Deepak Rawat (Querist)
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23 July 2021 Good Morning Member.
Please give legal advice on below mentioned case.

Company A want to make legal agreement with its Sub contractor for not to doing business with their client directly or indirectly for next 5 years. In the breach of the above said agreement, contractor will be liable to pay a fix amount as penalty.

Here, I want to know can a company make such agreement or this agreement will be void on the ground abstain from doing business.

Please give your valuable legal advice.

Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 July 2021 Such agreement is legally valid. It's not restricting doing business with other than company A's clients.

Message likes : 1 times

PARAS CHHAJED

PARAS CHHAJED (Expert)
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25 July 2021 This type of agreement is called non compete agreement and even charging / paying non compete fee is also allowed.

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