Drafting an IT Reseller Agreement: Non-compete clause

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Table of Contents

• What should be included in an IT Reseller Agreement?
• Non-compete clause

Your IT Reseller Agreement can set out how the reseller may work with other parties. On the other hand it can also protect you by restraining the reseller from working with or promoting your competitors. You can also address what products the reseller can and cannot sell when setting out how exclusive or non-exclusive the relationship will be.

What should be included in an IT Reseller Agreement?

You should consider including a restraint clause in your IT Reseller Agreement. However, the reseller may engage in other business during the term of the agreement, provided it does not conflict with the reseller’s obligations under the agreement. If the reseller becomes aware of any conflict of interest between the agreement and any other work it has been offered or is undertaking, it should inform the distributor immediately and take all steps to resolve the conflict.

On the other hand, depending on your industry and your business it may be reasonable for the reseller to work with other similar businesses or to seek the same clients. Depending of the nature of the relationship you have, you can provide for conflicts of interests if agreed upon between the parties. You can also identify the particular products or businesses that you do not want the reseller to work with or bundle products with. You may also identify in the agreement that you want the reseller to only sell your software as an option for that particular type of software, to their clients.

Non-compete clause

You can alternatively include a strong non-compete clause that will protect your business when the IT Reseller Agreement is terminated, for example ensure that the other party doesn’t work with a competitor, advise or work for a competitor, you can also list competitors specifically in this clause.

You can also set out that resellers can’t contact your other clients or customers, for example you may separately provide similar services and you would not want the reseller to poach or take away your clients, you may also want to include that the reseller cannot poach or try to hire your existing staff or contractors. You should also set out that resellers cannot interrupt or negatively impact the relationship between yourself and your other suppliers or distributors. You should include the duration of the restraint and the area of the restraint, which usually relates to the area in which the products are being distributed.