Exclusivity clause in contract

I've been working out an agreement for a client for a medium-sized website, and they've requested a clause in the contract basically stating that I won't develop a similar website for any other company in their field.

Obviously this is a little different to assigning Full Rights or anything similar and I was wondering if anyone could advise;

- Is this a usual or reasonable thing to ask?
- Should I be charging a lot extra for this?
- Should I place a time limit on the clause, i.e. not within the 1st year from completion?
- Does anyone have any suggestions as to how to write the clause, so as not to make it so vague that it would effectively prevent me doing any work for anyone ever again?

They've also asked for a copy of the source code and/or full rights. Really I'm just not sure how to price this. So far I've costed everything on estimates at £200/day. At this price should they reasonably expect full rights and a copy of the uncompiled source, or are they just licensing the software from me for their use and I retain source rights?

Thanks for any help!

That's only £25/hour, they certainly shouldn't be expecting the earth for that. You ask about adding a time limit to the clause, if there isn't one there now then put one in immediately! It would be ridiculous to as a programmer never, ever, to code an app in the same field ever again. Try to keep the time limit down as much as possible, would you really want to decline a lucrative contract in a year's time on the basis of this clause? If the company doesn't agree with what you think is a reasonable limit, remember you're entirely allowed to walk away (after as much negotiation as you want to put into it).

A copy of the source code would be one thing but I'd be reluctant to hand over full rights, instead giving them a license to use your work. If they're prepared to shell out for handing over the copyright, and you're happy with it, then do so—but remember then you can't do anything with it afterwards without their permission.

Thanks, that certainly helps a lot! At least gives me some confidence to stand my ground a little.

They're not asking me to not build a website for anyone else in their field, just to not build a similarly functioning one. Basically it has a specific core feature that they don't want me to go selling to one of their competitors. Unfortunately I can't go into any more detail, for obvious reasons. However I was planning on limiting the clause to 1 year in any case; I'm still not going to go selling the idea to anyone else because I don't consider that would be ethical, but I'd rather not be tied to any indefinite agreement however specific the terms.

I thought perhaps I would transfer copyright of the layout/design/HTML/CSS over to them on completion, but retain copyright of the source, and simply license them to use the compiled binaries on a specific domain name.

It's quite frustrating because all this wrangling over contracts is eating up time, and making my day rate look even worse. However, two months was an outside estimate and if I can complete ahead of schedule then I will be doing a little better. At this stage I'd rather not walk away having already invested time, on the other hand I'm fully prepared to if the agreement isn't satisfactory!

Thanks again

I would tell them to go pound sand mate.
Just be extremely specific to their business and avoid in reference to "industry" or more generic terms like retail or construction and the like.
And yes you should charge a premum as it may keep you from another similar job.
If it were me I would just say no can do.
As far as the source they can just open an escrow account and keep a copy there but something would have to trigger the release such as you going out of business or worse no longer be alive.
This is standard practice for software developers and ther are several comanies that do it including major banks and offsite tape storage companies.
Good luck and beware of the sharks in the pool.
Cheers,
EJ

Originally Posted by Serializer I've been working out an agreement for a client for a medium-sized website, and they've requested a clause in the contract basically stating that I won't develop a similar website for any other company in their field. Obviously this is a little different to assigning Full Rights or anything similar and I was wondering if anyone could advise; - Is this a usual or reasonable thing to ask? - Should I be charging a lot extra for this? - Should I place a time limit on the clause, i.e. not within the 1st year from completion? - Does anyone have any suggestions as to how to write the clause, so as not to make it so vague that it would effectively prevent me doing any work for anyone ever again? They've also asked for a copy of the source code and/or full rights. Really I'm just not sure how to price this. So far I've costed everything on estimates at £200/day. At this price should they reasonably expect full rights and a copy of the uncompiled source, or are they just licensing the software from me for their use and I retain source rights? Thanks for any help!

That amount is not enough to justify a non-compete clause (thats what they are called in the US). It is rare in general to do that to contractors, it is known that they will work for whoever pays them. I wouldn't do it for that price. If you are writing code for them, they should get full rights to what they pay for. But a non-compete clause seems excessive unless they will be showing you information that would give you (or your next employer) a significant leg up in the market that would hurt them. If they are trusting you with that much info, you should work for a lot more.

I am not familiar with the scope and restrictions of the UK non-compete laws, so I also do not know what they could directly restrict you from doing. In the US, non-compete clauses can only ever place restrictions in competing companies in similar geographical regions (specifics past this this vary by state). I do not know what the courts have said about online businesses however and I don't know if the UK shares this similarity.

My advice is to talk to a lawyer about the clause so that you know exactly what it implies. If the company you will be signing with has one, try asking him.