Can a court re-write a restrictive covenant?

24th July 2014

Can a court re-write a restrictive covenant?

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If a restrictive covenant has been badly drafted such that it does not reflect what the parties clearly intended, can a court re-write it?

The Court of Appeal has said no. In Prophet plc v Huggett Prophet was a company which created and sold its own software to the fresh produce industry. A restrictive covenant prevented Mr Huggett from selling Prophet’s software after he left. He joined a competitor, which sold competing software but not Prophet software which was only sold by Prophet. The employer had clearly intended to prevent former employees working in such competing businesses but read literally, the restrictive covenant provided no protection.

The High Court held that the clause should be rewritten to give effect to the intention of the parties, to prevent Mr Huggett selling software which was similar to Prophet software.

The Court of Appeal disagreed. The court said that whilst a purposive approach could legitimately be taken where a restrictive covenant was ambiguous, the same did not apply where a covenant was clearly worded albeit very badly. Prophet had drafted the covenant, and was stuck with it.

Comment

Restrictive covenants need to be very carefully worded to ensure that they a) provide the protection needed and b) are not so wide as to render them unenforceable. This case demonstrates why it is so important not to cut corners with the drafting of contracts and to engage a specialist employment lawyer to deal with it for you.
We have a team of employment lawyers in Ipswich who can help if you want to protect yourself with a restrictive covenant.  For a fixed fee appointment call us on 01473 211121. We have offices in Hadleigh and Felixstowe if an appointment at either location is more suitable.

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