Restrictive covenants are mainly put in place in two areas, employment or land and building purchases. They are there to protect a business or a seller by ‘restricting activity’.
Employment restrictive covenants are outlined in an employee’s contract. They focus on what happens when an employees leaves a company.
For example they may:
- ‘Restrict’ the divulging of commercial sensitive information to a competitor
- Define that client or a person cannot be poached (non-soliciting)
- Restrict the geographical locations a former employee can work in (area covenants)
- Prevent the former employee from dealing with clients (non-dealing covenant)
For a covenant to serve it purpose it needs to be drafted by an expert. There is a balance between protecting your business and making a covenant ‘wider than necessary’. We have experience of advising individuals and businesses regarding the specific content of covenants, seeking interim injunctions and assessing whether a breach has occurred. The experience of our employment team working in conjunction with our commercial litigation team ensures that we provide a complete service in this complex area of law.
The second area where restrictive covenants are widely used is in the purchase and sale of property. When a property is sold the seller may place restrictions on what can happen to the land in the future. For example it may prohibit certain building work or uses for the land. Our knowledgeable commercial property team, provide extensive advice to businesses when they sell land/property. Additionally, we can advise purchasers when they are looking to acquire land (provided there is no conflict). We can advise purchasers fully regarding the implications of any restrictive covenants and together with our commercial litigation team we can assist you if you are in breach of a covenant.