Does an illegal clause create liability, or just invalidate the contract? A private company in Arizona wanted to bring me on as an independent contractor to research what they need to do for (ISO/etc) standards compliance. I was asked to sign an NDA before learning details; I reviewed the NDA, rejected it, offered instead my word not to steal their stuff, and was accepted. The CEO is moving away from NDA's, anyway. But there may be a few people who have already signed it, and this worries me, because I wonder if the company can get in trouble later just for trying to contractually take away someone's rights. Legal compliance isn't my department (I'm not a lawyer), but it's close enough to my other duties that I would write up a cost-benefit proposal for paying a lawyer to write up a new (safe) NDA that can replace the old NDA (which ought to be terminated if there's any risk to letting it remain in effect). The document combines the NDA with a non-compete. The early (NDA) sections restrict the use of company documents for "the pursuit of profit or employment with" followed by a list of potential clients, including "Legal representatives of ANY kind". The late (non-compete) sections have nothing to do with documents anymore, but (switching out the company name for "EMPLOYER") does have this clause: If CONSULTANT's employment with EMPLOYER terminates for any reason, the CONSULTANT shall not, for a period of one year from the date of termination, have any business dealings whatsoever, either directly or indirectly or through corporate entities or associates with any customer or client of EMPLOYER or its subsidiaries or any person or firm which has contacted or been contacted by EMPLOYER as a potential customer or client of EMPLOYER; No restrictions (of industry) apply here, but taken in context with the NDA section (which implies intended clients), any legal representatives who were ever approached as potential clients (even if they immediately said "not interested" and refused to hear more), up to every legal representative anywhere if included in a marketing campaign that broad, would be off-limits for business dealings of all kinds. Such as, for instance, hiring a lawyer to review a contract before employment. No lawyer reviewed this contract with him before he began using it: "I did not have a lawyer draft it actually, and I just added a ton of shit in there and wrote it in about 5 minutes as an afterthought late at night about a month ago." I asked a lawyer from out-of-state (about this and other clauses), who noted that he was not giving legal advice, but this particular clause was unconscionable and (unless Arizona had some weirdshit rules) illegal. This is not the worst contract I've seen written by a non-lawyer, and I expect to see more people trying failing to create an enforceable contract because they think it will save them the money of hiring a lawyer; I believe the theoretical aspect (not my specific situation, which is more of an example) will be generally useful for employers to be aware of what penalties their company may risk facing later on. I don't expect to be lucky enough that this precise clause has come up in prior case law; I'm hoping for other instances of illegal clauses, so I can include links in a risk analysis to show any general trend of "this has or has not been problematic for similar cases".
Restraint clauses, restrictive covenants, or non-compete clauses are fairly standard in professional contracts. You would usually find, in a well-drafted restraint clause, cascading duration and geographic limitations. For example, it might read: ... as a potentional customer or client of EMPLOYER. This shall apply: For 12 months; or, if that is found to be unenforceable, For 6 months; or, if that is found to be unenforceable, For 3 months; or, if that is found to be unenforceable, For 1 month and within a radius of: 20km; or, if that is found to be unenforceable 10km; or, if that is found to be unenforceable 5km; or, if that is found to be unenforceable 1km from the work location. These cascading clauses are designed to protect the employer in situations where a court finds the original restraint to be unreasonable and unenforceable. The usual remedy for an unreasonable restraint clause is that a court will simply nullify it, or reduce it to a more reasonable time and geographical scope. However, if it materially changes the nature of the contract, then the contract as a whole may be voided.
Prove my work is not a trade secret violation Please don't. It's not your job to prove your innocence. The burden is on them to be specific, explain fully, and prove specific claims about your actions. In other words, don't justify, don't explain, and don't defend yourself to them. It's actually best you do not say anything to them, and just forward the letter to your legal counsel (Since you're selling software to be used in the medical field, I assume you already have some kind of legal counsel). For instance, even saying something as innocuous as "Managing patients, Exams, Bills etc are all public knowledge." could be used against you. Because it establishes the fact that you've been working on those features with them and that you've been working on those features with your new company (which doesn't necessarily follow, for all they know, you could have purchased a library module from someone else with those exact features). In other words, even if you were to reply with such an innocuous-sounding statement, you could be saving them months of cross-border discovery and litigation about some of their claims (even if you believed you were being entirely reasonable by defending yourself). But at the same time, don't take what I'm saying to mean that you should lie to them about which features you recently worked on. When I say that you shouldn't be talking to them. I mean that you should not be talking to them. You shouldn't be engaging with them and you shouldn't be giving them any shred of information whatsoever (implied or otherwise). It's not your job to make their job any easier. Do not reply to them. Don't even acknowledge the receipt of the letter (unless you already did by signing for it, which can't be helped). Use a legal intermediary. Give the letter to your own legal counsel (whether you signed for the letter, or not) and leave any reply to him or her (assuming he/she thinks this warning letter even warrants a response). And if this former employer gives you a phone call, kindly refer them to your legal counsel without saying another word.
No, a penalty clause is illegal, end of story. A contract could include a &quot;liquidated damages&quot; clause – this is how late fees are legal – that if you breach the contract in a certain way, you will compensate the company for the damage that you have done (bookkeeping, interest on money owed) in a standard and reasonable manner. Incidentally, what you describe is slavery, which is illegal throughout the US. The closest you could get is if the company offers a benefit for staying with the company for some period of time, then the employee might forego that benefit if they don't fulfill that aspect of the contract.
Since you asked two questions: No and No Does a company’s T&amp;C or their house rules supersede law No and is asking private health status (including the request to wear a mask) an offence? No A company cannot require you to do things that are against the law but they can require you to do things that go further than the legal minimum. The UK and Spanish governments do not require you to wear a mask but they do not prohibit private organisations (like airlines) for making it a requirement to access their facilities. The law requires that they make reasonable accommodation for people with disabilities. But you don’t have a disability, you just can’t sleep with a mask on. If you had a disability you would have no trouble in getting a letter from your doctor to that effect. The contract requires them to take you from the UK to Spain: they don’t have to enable you to sleep. If you read the T&amp;C, you will find that they can refuse to carry you if, in their reasonable opinion, you pose a hazard to the aircraft or the people aboard it.
No contract can limit a court's jurisdiction An NDA is a contract: it cannot prevent the application of the judicial process. Should your dispute reach a courtroom, the NDA and the documents it seeks to protect are all admissible and you should subpoena them from the defendant and submit those copies to the court (that way you are not breaking the terms of the NDA). What is not admissible is bona fide "without prejudice" documents: that is documents that contain admissions and offers made in a genuine attempt to settle a dispute. This privilege is established by the context of the document, not by if it does or does not have the words "without prejudice" on it (except, of course, that their presence/absence is part of the context).
It is the tenant's responsibility to understand the written contract. Oral statements about the contract do have to be consistent with the written contract (that is, in the context where you ask the landlord what a particular clause means before signing -- not in the case where you are modifying an existing contract). If I were renting a room and the contract says "Du må betale $1000 hver dag", which I don't understand because my Norwegian is terrible, I would ask about this, and the landlord might say that it means "You must pay $1000 every month", which could be a decent deal. Actually, the clause says "You must pay $1000 every day". When the reality of the situation becomes clear, then it is obvious that we didn't have an agreement in the first place. Perhaps he mis-spoke, or his English is as bad as my Norwegian, but I would not be held to rate in the written contract, assuming that I could back up my claim that he gave me that interpretation: the lease would probably be voided, as not an actual agreement. The underlying principle is that there has to be a "meeting of the minds" where the parties understand what they will get and what they must give, and there was a demonstrable failure of understanding. On the other hand, if I sign a contract without really reading it carefully, and there is a clause in English (which I speak) saying that I have to pay $1000 a day, but I didn't really think about the clause so that in a sense I didn't understand what I had agreed to, well, I may still be on the hook. (On the third hand, a court would probably say that's a ridiculous rent and void the contract on policy grounds). In general, "not my first language" is not a get-out-of-contract card, though attempts to trick people into signing documents in languages that they really have no understanding of won't be successful. Virtually nobody but a lawyer actually understands contractual language, yet contracts are enforced all the time. A contract can be explicitly modified by verbal agreement, or can be entirely verbal, but oral agreements face evidence problems, namely, what exactly did A and B say? It's scientifically well established that parties can be morally certain that the conversation went "A" (for one person) and "Not A" (for the other person). Using "could" rather than "would" in speech makes a huge difference in interpretation. There is a rule, the parol evidence rule, which essentially says that unless there is a good reason to not do so, the contract as written is what is enforced. Even if the conversation had been written into the contract, there's no basis in the contract for objectively determining whether a thing is old and "just broke". So even as an additional clause in the contract, it doesn't afford you a clear escape hatch. You might be able to prove with expert testimony that indeed the pipes had been corroding for a hundred years, and you could not have caused the pipes to burst.
As the comment by Ron Beyer mentions when a company wants to impose such restrictions they are normally done through non-compete, non-solicitation, and non-disclosure agreements, as well as via trade secret law. Note the word &quot;agreements&quot;. &quot;Restrictions on working in the field&quot; are simply a form of non-compete agreements. A company cannot, legally, simply impose such agreements on its employees. It can require an employee to sign such an agreement as a condition of employment, and it can often require such an agreement from a departing employee as a condition of a severance payment. Exactly what is covered by such an agreement depends on its terms, and those vary widely. In most US states there are limits on the scope and duration of such an agreement. In some states the restrictions can be broad and of fairly long duration, in others they must be narrow and of fairly short duration. An agreement that goes beyond a given state's limits will not be enforceable in court, if the defendant brings that fact up. Trade secret law can prevent an employee from disclosing the trade secrets of a former employer to a new employer, or indeed to anyone else. But that does not prevent a former employee from getting a new job in the field, as long as the employee does not disclose any trade secrets. If an employee has signed, or is asked to sign, such an agreement, it is a good idea to consult a lawyer with employment law experience. If the state is known, I could edit this answer to include the limits, if any, on such agreements in that state.
Nothing prevents firms from putting clauses like that in the disclaimer. If you're talking about goods (rather than services), much contract formation is governed by the Uniform Commercial Code, which 49 states have adopted (and which Louisiana has adopted part). However, the real question relates to whether that kind of language will be enforceable in court. A common way to attempt to avoid litigation is to insert a clause that requires arbitration of disputes (instead of litigation). The Supreme Court upheld the Federal Arbitration Act (FAA) in Southland Corp. v. Keating, 465 U.S. 1 (1984), so this can be successful. Contracts that have class-action arbitration provisions are a little dicier, but in AT&amp;T Mobility, LLC v. Conception, 563 US 333 (2011) , the court held the FAA preempts state laws that disallow class arbitration.