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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3692
Experience:  Solicitors 2 years plus PQE
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I was in a retail partnership with a friend and I sold to her

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I was in a retail partnership with a friend and I sold to her when we fell out. When I sold I signed a non compete contract. It was delivered in a very untimely fashion and I ended up signing it less than 12 hours after a general anaesthetic. There is also a standalone clause that says: termination. If either party wish to terminate this agreement they may do so in writing to the other party... It doesn't say they have to accept or agree. Is that my loophole to set up in business in the same town?
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.
What does the non compete clause say? Can you send me the exact wording?
Kind regards
AJ
Customer: replied 2 years ago.

Clause 19 is termination. It says, either party may terminate this agreement by providing written notice to the other party. Except as otherwise provided in this agreement, all rights and obligations under this agreement will terminate at that time... It the moves straight on to clause 20 which is assignment.

Expert:  Alex J. replied 2 years ago.
Hi
Thank you.
What does the wording of the non compete clause say? Does it say you must not compete for 6 months with the business? Is the business defined? Does it say you cannot form a company in competition?
Kind regards
AJ
Customer: replied 2 years ago.

Yes. It is a confidentiality agreement saying ivwont poach customers or staff. I won't release details of customers and suppliers. The non compete section says: if the transaction is not satisfactorily completed by the parties, then: a. Other than with express written consent of the purchaser, which consent may not be unreasonably withheld, the seller will not, until Jan 31st 2017, be directly or indirectly involved with a business which is in direct competition with the business lines of the purchaser that ate subject of this agreement. B. Until Jan 31st 2017 the seller will not divert or attempt to divert from the purchaser any business the purchaser has enjoyed or solicited..... I will tell you why I am asking that might help. We are in a small country town. We had a gift shop together and fell out. At the time we fell out and I signed this my husband had just opened a shop at the other side of toWN. The items sold are quite different with a few cross overs. My husband got a new contract and I have been looking after his shop for him. I'm not on payroll and everything is in his name. I want to revamp his shop to sell similar categories of products to my old shop. Can I get out of the agreement or if I don't go on payroll and keep everything in my husbands name can I still get sued by the 'purxhaser' in this Contract

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Assuming the transaction means you being bought out of the business, then the non compete restriction only applies if the "transaction" has not completed.
Have you been bought out?
Kind regards
AJ
Customer: replied 2 years ago.

Yes. Last January I had to sign this before she would pay me. The payment went through and all partnership accounts and tax returns paid and finished. I have no connection there any more

Expert:  Alex J. replied 2 years ago.
Hi
Thank you.
Do you have anything in writing to confirm that you have left the business and have been bought out? Other than the Confidentiality Agreement?
Kind regards
AJ
Customer: replied 2 years ago.

Yes confirmation of £2000. A letter from her saying I can have money when I sign this agreemenT that she agreed to buy me put for that price. Termination of partnership on tax return. Receipt of the amount she agreed to pay

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
I would be of the opinion that this is not enforceable for the following reasons:
(i) The termination (i.e the transaction) has been completed - an accordingly the non compete clause was only enforceable if the transaction was not completed. You have evidence to show it was satisfactorily completed;
(ii) Based on the wording you have provided, the clause is not drafted well enough to be enforceable. The definitions are not clear, it does not clearly identify the commercial purpose of the clause or what business should not actually be competed with. For this reason I believe any court would reluctant to enforce this. Non compete clauses restrict someones ability to work, therefore are against public policy, on that basis for them to be enforceable they have to have a proper purpose and be drafted as specifically as possible.
Is your ex partner likely to try and enforce this?
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.

Like I say it's a small town so direct competition us everywhere e.g. Every shop sells greeting cards. If she could wwin, and I pay her costs she would consider it out of spite probably!! It is a very generic form downloaded off the internet. The confidentiality bits even go into things like me not sharing computer coding which we never had etc. So you think I don't have to write a letter to satisfy clause 19? Or does that mean termination before the transaction was complete?

Expert:  Alex J. replied 2 years ago.
Hi
Thank you.
She has sent you the termination payment so it can be inferred she is satisfied, I suppose the only thing you could do is confirm in writing that the termination transaction has been completed.
I think it is unlikely she would successfully enforce this, but that said you would still have the inconvenience of arguing with her, as it is her prerogative to enforce this (rightly or wrongly).
I think if she tries to make a claim, you should go and get a local solicitor to respond to the claim for you. This will let her know you have been advised and cannot be bullied.
Kind regards
AJ
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