As businesses shake off the shackles of recession and make plans to grow, it is crucial to protect against unlawful competition.
A recent case (summarised below) proves how important accurate restrictive covenants can be in ensuring staff don’t work directly for a competitor.
Prophet Plc – v- Huggett:
Mr Huggett was employed by Prophet plc as its UK Sales Manager. Prophet plc is engaged in the business of developing, selling and updating computer software for use in the fresh produce industry.
His contract of employment contained a 12 month non-compete restrictive covenant in relation to him joining a competing company and selling ‘Prophet’ software.
Practically, due to poor drafting, the restrictive covenant provided no protection to Prophet as no other firm sold Prophet software. Mr Huggett resigned from his role and began a new position at a direct competitor and so Prophet plc sought an injunction to prevent Mr Huggett from working there, or any other software supplier in the UK fresh produce sector until January 2015.
The High Court allowed Prophet’s application, and re-wrote the clause to give effect to the intention of the parties. The Court of Appeal disagreed, Prophet had a poorly drafted restrictive covenant and were stuck with it. This case provides a clear warning to businesses to ensure restrictive covenants are completely accurate, legally watertight and free from error.
At WHN, we understand the demands of running a business. To help alleviate your concerns and protect you against risky short cuts in the drafting of contracts and agreements, we offer a free audit service for business owners in Lancashire and Greater Manchester.
To discover how to get your restrictive covenants checked free of charge, contact Michael Shroot at michael.shroot@whnsolicitors.co.uk or call 0161 761 8087
