Bruce Gardiner & Ming Yee Shiu present a two-part practical guide to enforcing or resisting covenants
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When a client is seeking advice about restrictive covenants, time is often in short supply. An ex-employee may be poaching customers and his former employer fears a catastrophic effect on his business. Or an ex-employee may have started a new business and fears his former employer may be threatening to obtain an injunction that could close his business down. In both these situations, the client needs help, and needs help fast. This two-part article sets out a 10-point checklist to use when there's no time for detailed legal research.
Is the covenant a contractual term?
This fundamental question is often overlooked. If the restrictive covenant is not a term of the employment contract, then it will obviously not be enforced by an injunction. There are several situations where the ex-employer's understanding of the contractual position may not be the true position. These can be broadly divided into two situations.
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