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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50197
Experience:  Qualified Employment Solicitor
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I sold my business in 2010 , to another security company ,

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I sold my business in 2010 , to another security company , I've now left 2and half years ago at the time in 2010 I signed a covenant on the 8.12. 2010 stating not work within 100 miles for five years , my latest visit to citizens advise said the covanant was too long , in the last few months I've had several customers contact me ( approached me ) through dissatisfaction of there service and asking me questions , all I've done is given them details of other companies , I've not done any work for any customers from my previous company or made any financial gain in any way , I've just had a letter from the company I sold too stating I must stop immediately and that I'm going to get a solicitors letter stating there losses and exspenes which there going to come after me for , I have in the last few months started a ltd company myself but that's only because the agency I'm now working for requested me to do so Please advise. Regards Alan
Hello, my name is***** am a solicitor on this site and it is my pleasure to assist you with your question today. What exactly did he covenant restrict you from doing?
Customer: replied 2 years ago.
It says as followsThe vendor covenants with the purchaser that that the vendor will not operate a similar type of business or aid any other business within 100 miles of ( there post code ) for a period of 5 years from the date of this agreement and that's it
Customer: replied 2 years ago.
Did you get that reply ?
Customer: replied 2 years ago.
Ben ?
Hi sorry my connection dropped - so have you set up a business within this radius?
Customer: replied 2 years ago.
Yes but only due to the fact I'm working through an agency and they wouldn't give me any contract work as a lot of agencies steer away from sole traders due to fraud
And by you working in this new business, are you in direct competition with the other company and would their business be affected?
Customer: replied 2 years ago.
The company I work for is mercury systems based in Hemel Hempstead which is over a 100 miles away , mercury use fast track recruitment as a go between , between me and them , I work 5 days a week for Mercury systems on public houses so I work exclusively for another security company through an agency on a self employed basis
Customer: replied 2 years ago.
There head office is in Hemel but the pubs can be anywhere
Customer: replied 2 years ago.
My main question is 5 years enforceable for a covanant ?
ok but does this directly compete with the company you sold?
Customer: replied 2 years ago.
The honest answer is I don't know , I'm working for another security company , the pubs I work in are customers of Mercury systems there not my own customers , I just subcontract obviously I need to earn a living some how
For a covenant to be enforced it must be deemed reasonable. One of the factors that make up its reasonableness would be the length of time it is for. In general, a reasonable covenant is considered valid for 6-12 months, although this is mainly in the case of employment where an employee is restricted from doing something within this period after they leave their employment.
When it comes to a business sale, the restrictions can be longer and a longer period would not necessarily make them unreasonable or unenforceable. For example, in the case of Emersub v Wheatley a worldwide covenant of 4 years was deemed enforceable. There has even been a case of an unlimited restriction period in the case of Connors Brothers Ltd v Connors, although this dates back some 70 years so may not be necessarily that relevant these days. But it is still an example that covenants can be enforceable even if they are for a number of years and there would be a stronger case for a longer covenant in a business sale case, like yours, rather than an employment one.
There is unfortunately no set length of period which would make a covenant enforceable and each case will depend on its own unique facts. Therefore, only a court can determine if the specific covenant you are subject to is reasonable and should be enforceable.
I would say though that as you are working through another company and you have only set this up as they required you to do so and you are not personally and deliberately working in competition with the old company, plus the fact it is so close to the end of the restriction – these are all factors which would make it more difficult to enforce this covenant. They could also be bluffing and just using this to try and stop you from doing what you are doing – they may not necessarily take this to court as it will be a risk for them too, although only time will tell if that is the case.
I trust this has answered your query. I would be grateful if you could please take a second to leave a positive rating (selecting 3, 4 or 5 starts at the top of the page). If for any reason you are unhappy with my response or if you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
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