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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3695
Experience:  Solicitors 2 years plus PQE
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I was wondering if you could help steer me in the right

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Hi I was wondering if you could help steer me in the right direction regarding a legal matter please. I was a director in a family business that was sold two and a half years ago. As per the sale there was a covenant clause in place to stop myself and my father restarting. My father has fully retired now but I am keen to start out on my own. The covenant clause was for two years which has expired now but the issue I am concerned about is that with the sale of the company I was asked to stay on as a manager to keep the business running. As such I was giving a contract of employment the same as the other members of staff. What I was wondering is if I started on my own would I be breaching any law. If this is an issue are there any avenues I could explore to still make the move happen. Thanks Lyn Evans
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Can you post the exact wording of the restrictive covenant you signed?
Did your employment contract contain a restrictive covenant?
Kind regards
AJ
Customer: replied 2 years ago.
Hi AJ thank you for looking into this matter for me. The covenant clause that was placed in conjunction with the sale of the business is written below. The Mr Evans named below refers to my father but there are parts which apply to myself. As stated previously the two years mentioned has passed as the deal was done some time in November 2012. I shall try to dig out my current employment contract while you read the covenant clause below.
11. Restictive covenants
11.1 The seller and Mr Evans respectively undertake to the buyer that they each shall not:
a- during the period of 2 years beginning with the completion date, in any geographic areas in which the business was carried on at the completion date, carry on or be employed, engaged or interested in any business which would be in competition with any part of the business as the business was carried on at the completion date.
b- during the period of 2 years beginning with the completion date, deal with or seek the custom of any person that is at the completion date or has been at any time during the period of 12 months immediately preceding that date, a client or customer of the business.
c- during the period of 2 years beginning with the completion date
(i) offer employment to, enter into a contract for the services of, or attempt to entice away business, any individual who is at the time of such offer or attempt, and was at the completion date, one of the employees holding an executive or managerial position with the business; or
(ii) procure or facilitate the making of any such offer or attempt by any other person;
(d) at any time after completion, use in the course of any business:
(i) the words "picton press", or
(ii) any trade or service mark, business or domain name, design or logo which , at the completion date, was or had been used by the business,
or anything which is, in the reasonable option of the buyer, capable of confusion with such words, mark, name, design or logo; and
(e) during the period of 2 years beginning with the completion date, solicit or entice away from the business any supplier to the business who has supplied goods and/or services to the business at any time during the 12 months immediately preceding the completion date if that situation or enticement clauses or would cause such supplier to cease supplying, or materially reduce its supply of, those goods and/or services to the business
11.2 The under takings in this clause 11 are intended for the benefit of the buyer and apply to actions carried out by the seller Mr Evans ( as the case may be) ( or any of its affiliates) in any capacity, and whether directly or indirectly, on the seller's (or any of its affiliates) or Mr Evans (as the case may be) own behalf, on behalf of any other person or jointly with any other person.
11.3 Each of the covenants in this clause 11 is:
(a) a separate undertaking by the seller and shall be enforceable by the buyer separately and independently of its right to enforce any one or more of the covenants in this clause 11; and
(b) considered fair and reasonable by the parties but if any restriction shall be found to be unenforceable but would be valid if any part of it were deleted or the period or area of application reduced, the restriction shall apply with such modification as may be necessary to make it valid and effective.
11.4 The consideration for the undertakings contained in this clause is included in the purchase price.
11.5 For the avoidance of doubt the seller and Mr Evans (myself) hereby acknowledge that the provisions of clause 11.1 (a) shall prevents him of them from carrying out the business in connection with Lion World Travel provided always that whatsoever shall prevent Mr Evans from continuing to act as the promoter for and on behalf of The Friendship Association of Lion World Travel.
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
I will review this and revert to you as soon as possible.
Kind regards
AJ
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Reading this clause it is clear that the restrictions run from the "Completion Date".
This cannot then be altered unless you signed additional restrictions in your employment contract.
If two years has expired from the Completion Date then you are free to start a competing business.
Non compete clauses are anti competitive - there is therefore a reluctance from courts to enforce them unless they are very specifically worded, very clear and do not go beyond any intended purpose.
Are you going to start a similar business?
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.
Hi AJ, in response to your question I plan to offer the same commercial printing services that I already do with my current employment. This would mean myself carrying on trading with certain customers putting us in competition. The current owner in fact owns and operates another print company from the same premises under a different name albeit in a different print market to commercial print which accounts for about 70% of his income. The commercial printing side of the business run by myself are all previous contacts of mine prior to the sale and therefore stayed as a result of me carrying on. Over the subsequent two and a half years the owner has not had any contact with any of my customers. I don't know if this helps. I can retrieve my contract of employment later on and forward the details over.
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
As long as two years has expired from the "Completion Date" then you are free to carry on all the activities as listed in the above non compete clause that were otherwise restricted.
The only thing you are seeming not allowed to do is:
(i) Use the word "Picton Press" in your trading name of your new business;
(ii)register any trade or service mark, business or domain name, design or logo which , at the completion date, was or had been used by the business,
or anything which is, in the reasonable option of the buyer, capable of confusion with such words, mark, name, design or logo.
You would need to ensure your new business is completely distinguished in name from the old.
If your employment contract as separate restrictions that is a different matter, but I would be happy to have a look?
Any feedback in the mean time is gratefully received.
Kind regards
AJ
Customer: replied 2 years ago.
Hi I have just looked at the employment agreement and it's the same terms but there is nothing signed. Does this mean I have no employment agreement in place ie could I set up business with no complications with current employment ?
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Can you confirm:
Were you paid a salary? Was this salary part of the remuneration for the shares?
What was your job title? Did you have a senior role?
Is the contract unsigned by both parties? Is the contract also undated - i.e if it is unsigned does the "Completion Date" have a definition?
Kind regards
AJ
Customer: replied 2 years ago.
Hi AJ the paperwork I can find is a notification of a tupe agreement agreed by both my father and the new owner to take us on at the same terms as before. I don't recall signing anything other than the original covenant and the other employees who remained don't think that anything was signed either. Prior to the move I was a director on paper but had no official title, with the sale of the business I was promoted to works manager but again nothing was signed to make this official. The tupe notification paperwork was signed by both my father and the new owner but not by staff.
Expert:  Alex J. replied 2 years ago.
Hi
Thank you.
If you did not actually sign additional restrictive covenants then the ones in the share sale agreement are the ones that apply. If you did not sign new ones then they cannot have an effective date.
If you TUPE transferred on the same terms and the terms you had were not actually written down then you cannot have inherited additional restrictive covenants.
Kind regards
AJ
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