Tag: South

Restrictive Covenants

General Rule: Void unless reasonable in respect of subject matter, time and distance.

1st step An employer must have a legitimate business interest to protect

(e.g. trade secrets, goodwill, customer connections)

What is e/er claiming rights over ? ie, a salesman knows and deals with customers face to face and could potentially give details re deals, customer base to new e/er and then undercut former e/er and take business away

Ie, a research + designer for a drugs company working in a medical capacity has lots of secret info not in the public knowledge

2nd Step the restraint must be reasonable

  • must be no wider in protecting the type of work
  • no wider than necessary in time and area. Taxi company Manchester
  • If they are drafted too widely then it may be void.
  • If the Court decides its unreasonable the whole clause could fail

ie – senior management in a coach company, e/er says after leaving that he cant work for any coach or tour operator in a 3 mile radius for 12 months

– is 12 months too long ? how long till the info goes out of date ?  

– if it’s a computer company 12 months is too long as it would be obsolete as technology changes all the time

– is 3 miles too far ?  decide for yourself

– is coach AND tour operator too wide ?  yes, too restrictive, basically stops e/ee working in the coach trade within 3 miles

– you can only stop them working within your FIELD of work

– tour operator is outside the field therefore too restrictive

– if its too restrictive WHOLE clause fails…… unless…….. blue pencil rule

Blue Pencil Rule you can use this rule in some circs to cross out a certain bit of a

clause

Court can sever offending parts of clauses

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confidential information

Under the English law of confidential information, there is a focus on assessing the confidential quality of the information rather than the steps that have been taken to keep the information secret. and This difference could result in the narrowing of the definition of what might be considered a trade secret.

Take the recent case of CF Partners (UK) LLP v Abogados de accidentes Chicago CF Partners gave Barclays confidential information showing that the carbon trading company was significantly undervalued. CF Partners did not have a Non-Disclosure Agreement with Barclays. Barclays subsequently purchased the carbon trading company itself and made a significant profit. CF Partners was awarded £10,000,000 because Barclays had exploited CF Partners’ confidential information. The point of this is that CF Partners won, even though it did not have a Non-Disclosure Agreement in place.

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