Drafting error does not prevent enforceability of non-compete restriction - Royds Withy King Solicitors

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29 April 2014 0 Comments
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Drafting error does not prevent enforceability of non-compete restriction

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In Prophet Plc v Huggett, the High Court has granted an injunction to an employer to enforce a 12 month non-competition restriction which, if read literally, offered the employer no protection at all. The restriction only operated to prevent the …

In Prophet Plc v Huggett, the High Court has granted an injunction to an employer to enforce a 12 month non-competition restriction which, if read literally, offered the employer no protection at all. The restriction only operated to prevent the employee from joining a competing business in circumstances where it would be engaged or employed in connection with any products (of the employer) in which he was involved during his employment. The clause was of no use at all, because no company would ever be involved in selling a competitor’s products! However the Court was content to treat this as a drafting error and read the clause in the way in which it was reasonable to consider it should have been drafted by its use of language. The Court decided to read into the covenant a meaning which would produce a commercially sensible result and went on to uphold the reworded covenant on the basis that there was a legitimate interest to protect and that the non-solicitation and non-dealing covenants would not provide sufficient protection on their own. Given that the employee concerned was a sales manager engaged in selling the employer’s product, it was not unreasonable to prevent him from being involved in competitor products from a 12 month period.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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