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Subcontractor Non Compete Agreement Template for South Africa

This document is a legally binding non-compete agreement designed for use in South Africa, specifically tailored to govern the relationship between a main contractor and subcontractor. It incorporates provisions compliant with South African competition law, labor regulations, and common law principles regarding restraint of trade. The agreement sets out reasonable restrictions on the subcontractor's ability to compete with the main contractor's business, including specific temporal and geographical limitations, while ensuring compliance with Section 22 of the South African Constitution regarding freedom of trade.

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What is a Subcontractor Non Compete Agreement?

The Subcontractor Non-Compete Agreement is essential for businesses operating in South Africa that engage subcontractors with access to sensitive business information, client relationships, or proprietary knowledge. This document is particularly crucial when the main contractor needs to protect legitimate business interests while ensuring compliance with South African competition law and constitutional rights. The agreement typically includes specific provisions regarding duration, geographic scope, and prohibited activities, all crafted to meet the reasonableness requirements under South African common law. It's commonly used in professional services, technology, and consulting sectors where subcontractors may gain significant insight into business operations and client relationships.

What sections should be included in a Subcontractor Non Compete Agreement?

1. Parties: Identification of the main contractor and subcontractor, including full legal names and registration details

2. Background: Context of the relationship between parties and purpose of the agreement

3. Definitions: Key terms used throughout the agreement, including 'Confidential Information', 'Competing Business', 'Territory', etc.

4. Duration: Time period during which the non-compete obligations will remain in effect

5. Scope of Restrictions: Detailed description of prohibited activities and business areas

6. Geographic Limitations: Specific territories where the non-compete restrictions apply

7. Confidentiality Obligations: Requirements regarding handling and protection of confidential information

8. Acknowledgments: Subcontractor's confirmation of the reasonableness of restrictions

9. Breach and Remedies: Consequences of violating the agreement and available legal remedies

10. General Provisions: Standard clauses including governing law, jurisdiction, and entire agreement

What sections are optional to include in a Subcontractor Non Compete Agreement?

1. Non-Solicitation: Additional restrictions on soliciting clients or employees, used when there's direct client contact

2. Intellectual Property: IP protection clauses, included when subcontractor creates or handles intellectual property

3. Training and Trade Secrets: Protection of specialized training or trade secrets, used when substantial proprietary knowledge is shared

4. Garden Leave: Provisions for paid non-compete period, used in high-level subcontractor relationships

5. Severability and Modification: Allows court modification of unreasonable terms, recommended for complex restrictions

6. Return of Materials: Procedures for returning company materials, used when physical or digital assets are provided

What schedules should be included in a Subcontractor Non Compete Agreement?

1. Schedule A - Restricted Territory: Detailed map or list of geographic areas covered by restrictions

2. Schedule B - Competing Businesses: List of specific competitors or types of competing businesses

3. Schedule C - Confidential Information: Detailed categorization of confidential information covered

4. Schedule D - Project Scope: Description of projects or services provided by subcontractor

5. Appendix 1 - Consideration: Details of any consideration provided for non-compete obligations

6. Appendix 2 - Acknowledgment Form: Formal acknowledgment of restrictions to be signed by subcontractor

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

South Africa

Publisher

Ƶ

Cost

Free to use

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