News & Legal Updates
Sign up to news & legal updates
In Prophet plc v Huggett, the Court of Appeal has overruled a finding of the High Court whereby the court inserted additional words to give meaning to an otherwise useless restrictive covenant. The case concerned a sales manager at a computer software company. His contract of employment contained a 12 month restriction against competition after he left employment. The clause was worded so that the restriction would only operate to prevent Mr Huggett from working “in any area and in connection with any products in which he was involved whilst employed”.
The difficulty with the clause was that the products with which he was involved whilst employed were specific to Prophet. The products were named ‘Pr3’. On a literal interpretation of the clause it was useless because of course no competitor would be selling the Pr3 product as this was specific to Prophet. The High Court judge formed the view that something had gone wrong with the drafting of the clause as it did not reflect what the parties had intended.
The judge required to ascertain what a reasonable person would have understood the parties to have meant by the chosen wording. To that end, he inserted the words “or similar thereto” at the end of the clause. The judge regarded this change as being the minimum required to achieve a commercially sensible meaning to the clause.
The Court of Appeal disagreed with this approach and overturned the injunction (the English equivalent of what is known as an interdict in Scotland) which prevented Mr Huggett from competing. The Court of Appeal formed the view that there was no basis for the judge to recast the original bargain as he did. The employer had received specialist advice on the clause and the draftsmen had chosen his words with “specific and deliberate care”. The conclusion was that the employer had “made its clause 19 bed and must now lie upon it”.
This decision emphasises the need not only for precise drafting of restrictive covenants, but also for careful consideration of the matters which an employer is seeking to protect against before putting pen to paper.
Senior Solicitor - Employment Law
The opinions expressed in this site are of the author(s) only and do not necessarily represent the opinions of Blackadders LLP.
Blackadders takes all reasonable steps to ensure that the content of this site is accurate and up to date. The site is not, however, intended as a substitute for seeking legal or other professional advice but rather as an informative guide to the services provided by Blackadders and topical legal developments. Site visitors should always seek advice tailored to their specific situation. Consequently, Blackadders accepts no responsibility for any loss or damage suffered by anyone acting or failing to act on the basis of information contained on this site. Downloading of material contained on this site is at the user’s own risk and all necessary virus checks must first be carried out by the user. Blackadders is not responsible for the material found on any web sites linked to this one and links to this site may only be made with Blackadders prior consent.
Blackadders owns the copyright in this blog and all material contained on it. The material on this site may be downloaded for personal use only and must not be altered. Otherwise, Blackadders’ written consent is required before any material on this site is reproduced, copied or transmitted in any way.
Information passed to us via this site is kept confidential and will not be disclosed to third parties except if authorised by you or required by law.
© Blackadders LLP 2011
Members of the Law Society of Scotland. Authorised to conduct Investment Business under the Financial Services & Markets Act 2000 by the Financial Services Authority.
Blackadders Solicitors is a trading name of Blackadders LLP, a limited liability partnership, registered in Scotland No SO301600 whose registered office is 30 & 34 Reform Street, Dundee, DD1 1RJ. Reference to a ‘partner’ is to a member of Blackadders LLP.Back to News & Legal Updates