Non compete contract business legalities

By : Forum Member
Published 23rd October 2014 |
Read latest comment - 30th October 2014

Hi

 

I was wondering if any of you would be able to give me some advice regarding a potential legal issue that I may encounter regarding my business.

 

I used to work for a children's science based entertainment company based abroad, with franchises around the UK, and before I left I started doing a similar kind of thing. They knew about it but didn't know I was also doing science. I left just over 1 year ago.

 

Just before I left, I had to sign a non compete contract that states for up to 2 years after leaving, I can't directly or indirectly do any similar work within 100 miles of where they operate (which is everywhere). It is very explicit and goes through everything that I can't do and what will happen if I break the contract. In an email though, my immediate manager (not the owner of the franchise) said it lasts for 1 year.

 

The franchise that I was working for before told me I shouldn't be doing what they thought I was doing, but they didn't tell the headquarters because they thought I wasn't doing science. Now I've been told by a few people (including a solicitor who wasn't particularly helpful, hence this post) that 2 years might be seen as unreasonable in court and wouldn't hold up, and before I decide to continue with it and give it the attention it deserves, I need clarification on this. A few people also commented that they can't have a copyright on science. Some of the things I do are the same (how could they not be, science is for everyone, and a few rival companies also do the same demonstrations) but in these cases my scripts are a bit different.

 

So far I've not advertised at all really, and have done a little bit of work with a client I worked for with the old company as well as a couple of other people. I was scared to push it out of fear of them finding out and suing me, as I'd heard of this happening before with this company within the UK.

 

So if I push it as much as I can and they find out, do you think I will have a problem? If it does go to court, what are the chances I will lose or incur costs (as I am basically broke at the moment). Also, due to the fact that I've broken the contract even before I finished working for them and within the first year, will this be a problem after the contract period ends (or whenever a court determines an appropriate amount of time has passed) or won't it matter after that? I have a plan that could make the company (as one part of a much bigger picture with many facets) very big, and there would be no point in pursuing that if all this could be backtracked and I could get screwed over because of the work I did before the end of the contract.

 

Thanks for your time


PM123
Comments

Hi PM123,

Thank you for explaining your situation. I would like to be more useful than your previous lawyer, but may need to see the details of what you do, and what is permitted under the contract.

1. You have signed the contract that is quite detailed in terms of what you can and can't do throughout the 2 years. The email from your manager could say otherwise, but it is arguably not a very good change of terms of contract (unless they were explicitly telling you that the contract has changed)

2. They can't "copyright" science, but they can prevent you from providing similar services in their area. I would recommend you looked closely at what you can and can't do, and try to work your way to perform your shows without breach of contract, if possible.

3. I think that the fact you have breached your contract before may not mean a lot for the company right now, but they will surely use it in court, if you prove to be a problem for them (e.g. become a strong competition)

4. You may need to look at the termination clause and see if you can afford to terminate the contract prematurely. 

5. Another way would be to ask the company to waive your non-compete agreement. However, they may choose not to do so or ask you for something in return.

6. I think you should think seriously about this issue, and given your financial situation at the moment, going against your previous company's legal machinery may not be the best idea.

That being said, you are more than welcome to discuss it with a solicitor (it can be me ) in more detail and work with them to ensure that what you do is legal.

I hope this answer helped you and I look forward to any questions you may have.


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Thank you for your helpful and informative post. In the contract they go as far as to state that I can't even advise someone operating a similar business to what they are doing. They specifically state their business as organising and producing entertaining and educational, small and large scale participatory science shows, programs, activities and events for children conducted in a variety of formats including in-school and after-school programs, special events, birthday parties and camps. There is more but I don't think it is particularly relevant. Needless to say, it covers every important aspect. My business follows the same format of shows, afterschool clubs, parties etc.


PM123

I'd be inclined to put your business in the name of a partner / spouse / friend, at the end of the day your previous employers contract is with you and not with anyone else. I guess technically you wouldn't be advising anyone if you talk a lot in your sleep....


Thanks,
Barney

If i'm still making money from it though wouldn't that be a problem? Also as i'm self employed i've had to submit invoices of my expenses and earnings related to the business, so wouldn't it be too late to do this?


PM123

It may be the case that even if the company is registered on different name, you will be performing the science experiments, which is, in my understanding prohibited by the non-compete. There may be a little chance of going around the contract, but if it is as watertight as it seems, it may be difficult. 


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As it stands at the moment, I think it's best I do something else then unfortunately. Without a definitive answer saying I would 100% be fine, then I don't want to be looking over my shoulder. Thanks for your help guys.


PM123

That's a very wise decision for now! If you need any further help, though, please let us know!


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