By
08-2008
Injunction to enforce restrictive covenant refused; sending samples to a customer was not the same thing as supplying goods. In the case of Basic Solutions v Sands the High Court has had to consider the position of an employee who had signed a restrictive covenant which prevented him, for twelve months after leaving the employer company, from ‘negotiating with’ or ‘dealing with’ relevant customers (defined as those to whom in the previous 2 years the company had sold products and where he had been involved in the sale), causing them to ‘cease or materially reduce’ orders or contracts with the company. Two days after leaving the company, the employee in question had been taken on by another company in the same line of business. Both companies were preparing to tender to supply a new product to the same customer. While he was with the company, the employee had been involved in the sending of sample products to that customer as a preliminary to being allowed to enter a tendering process. The company applied to the High Court for an injunction, claiming that to be involved in the tender on behalf of his new employer would breach the employee’s restrictive covenant. The High Court disagreed. The covenant was not wide enough to cover the present circumstances. The supply of samples to a customer to test prior to a supplier being permitted to tender for business did not come within the ambit of ‘negotiating with’ or ‘dealing with’ that customer. Furthermore, the restricted period of twelve months was too long. The company could only say that there were long lead times in this industry and this was not enough to justify the length of the restriction. The company was simply attempting to prevent the employee from engaging in the tendering process – a clear restraint of trade. Point to note –
Partner UK
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