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Can drafting errors have any effect on the enforcement of restrictive covenants?

Whenever employees exit a business, one of the first things that crops up for both the employer and employee is the enforceability of restrictive covenants.

Usually my response is; providing that the restrictions are fair, reasonable and necessary in protecting the company business, they are likely to be deemed to be enforceable by a court. However, the question that frequently follows is how enforceable are ill-drafted restrictive covenants?

In the recent case of Prophet plc v Huggett, the High Court held that ill-drafted restrictive covenants can be enforceable even when the court needs to add words in order to give it effect.

The employee in question was subject to a non-competitive restrictive covenant. An additional sentence in the contract qualified this restriction by defining what competition meant, in that it related to the provision of computer software systems for the fresh produce industry, produced by Prophet. When the employee moved the company sought to enforce the covenant.

The company accepted that on a literal reading, the competitor company would never provide the software systems produced by them and therefore the covenant would not provide them protection. However the Judge rejected the assertion that the clause should be given its literal meaning; instead, he concluded that the words “or similar thereto” should be added into the clause. The Judge then proceeded to consider the company’s injunction application on the basis of the covenant’s new formulation.

This case demonstrates the flexibility courts have when it comes to examining the enforceability of restrictive covenants. While I must stress that this is a first-instance decision, it does appear that the court has a broad discretion in this type of scenario.

If you have an enquiry relating to the drafting and enforceability of restrictive covenants contact me for a free consultation on 0113 350 4030 or alternatively samira.cakali@scesolicitors.co.uk.

PLEASE READ THE UPDATE TO THIS CASE HERE (28 August 2014). 


Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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