Restrictive Covenants 2014

Book your free initial call

"*" indicates required fields

Name*
Our 72 Hour Return Policy*
We endeavour to make an initial response to all enquiries within 24 hours but please be aware that on some occasions due to prior commitments or volume of calls we will not be able to respond in that time frame. We also operate a 72 hour return policy. This return policy means that if we have not responded with 72 hours of your initial enquiry we are unable to do so due to current workloads and we will destroy your data accordingly. This policy ensures you are not left waiting and have the certainty that your data is not compromised. In most instances however we are able to make contact within a 24 hour time frame. Please note our free initial advice service is available to clients at our total discretion and if your case is of a complex nature we may not be able to offer you a free consultation. However in these instances we will advise you what the charge would be for an initial fixed fee consultation.
This field is for validation purposes and should be left unchanged.

The recent High Court case of Prophet Plc v Huggett [2014] brought an interesting dimension to advice on restrictive covenants. The employer had drafted a 12 month non-compete restrictive covenant which if read literally offered the employer no protection at all. The clause was drafted in such a way that it could be read that he could as a sales manager not be engaged or employed in connection with any products he was involved in during his employment. In reality no competitor would ever be selling the employer’s products so the clause was useless.

The Court took a more unusual approach and read words into the covenant to produce a commercially sensible result. It corrected the drafting error by looking at what a reasonable person would have understood the parties to have meant. The Court then went on to uphold the restriction as re-drafted. It said that there was a legitimate interest to protect and that the non-solicitation and non-dealing covenants even coupled with the restrictions on confidential information would not provide sufficient protection on their own.

Whilst this may provide some comfort for those drafting covenants, it does not provide comfort for those trying to advise on the covenants already in place. It seems now it is not just what is written but what ought to be there to give it commercial effect where the clause is not well drafted.

Written by
Edward Aston
22nd April 2014