Previous Employment Contract
Discussion
I'll keep it brief...
Person worked for Company A up until September 2016, in June of 2016 they formed a limited Company B with a view to setting the wheels in motion and handing in notice. This happened and Company B started competing with Company A
Fast forward to November 2016 and Company A went into administration.
Director from Company A bought the assets and set up again as Company C.
Company B continue to beat the s
t out of Company C as they did with Company A.
(Have I lost you all yet?)
Fast forward to today and former employee, now Director of Company B gets letter from Director of Company C (former Director of Company A), saying the following;
Not worth the paper it's written on is it?
Person worked for Company A up until September 2016, in June of 2016 they formed a limited Company B with a view to setting the wheels in motion and handing in notice. This happened and Company B started competing with Company A
Fast forward to November 2016 and Company A went into administration.
Director from Company A bought the assets and set up again as Company C.
Company B continue to beat the s
t out of Company C as they did with Company A.(Have I lost you all yet?)
Fast forward to today and former employee, now Director of Company B gets letter from Director of Company C (former Director of Company A), saying the following;
Letter said:
Dear Director of Company B,
As you well know, you were an employee of Company A until 30th September 2016. Under your contract of employment you were expressly prevented from being engaged with any other business without the written consent of Company A. Equally you were expressly prevented from engaging in commercial competition with Company A until the completion of a period of three months after your employment ceased.
I have now been presented with copies of emails sent by you via your Company B account which show categorically that you breached both of these conditions. They also show that you (and your associates) have engaged in the lowest form of business competition whereby you simply try to do down your competitors, including Company A and it's successor company, Company C.
Whilst the latter is something about which I can do very little as it is a matter of business ethics, the former is something I can and will act upon. I would ask that you and Company B (since you are on record as being in control of the company) immediately withdraw from all areas of commercial competition with Company A and it's successor entered into prior to December 30th 2016 as such activity is in breach of your personal contractual responsibilities. Should you fail to do so, I will seek restitution against you personally in order to protect my commercial interests.
Yours sincerely
Company C are NOT, to my mind, a successor of Company A, they just have common directorship.As you well know, you were an employee of Company A until 30th September 2016. Under your contract of employment you were expressly prevented from being engaged with any other business without the written consent of Company A. Equally you were expressly prevented from engaging in commercial competition with Company A until the completion of a period of three months after your employment ceased.
I have now been presented with copies of emails sent by you via your Company B account which show categorically that you breached both of these conditions. They also show that you (and your associates) have engaged in the lowest form of business competition whereby you simply try to do down your competitors, including Company A and it's successor company, Company C.
Whilst the latter is something about which I can do very little as it is a matter of business ethics, the former is something I can and will act upon. I would ask that you and Company B (since you are on record as being in control of the company) immediately withdraw from all areas of commercial competition with Company A and it's successor entered into prior to December 30th 2016 as such activity is in breach of your personal contractual responsibilities. Should you fail to do so, I will seek restitution against you personally in order to protect my commercial interests.
Yours sincerely
Not worth the paper it's written on is it?
AyBee said:
Did he buy the assets from the administrators or the company?
The administrators. Assets went to auction.Company B put a horrendously cheeky bid in for the assets of Company A (£50k for £500,000 of stock) and Company C bagged it for not a lot more.
Former Director of Company A and current Director of Company C is now struggling to sell these assets because Company B is now run by former employees of Company A who left, resulting in the downfall of Company A.
AB said:
AyBee said:
Did he buy the assets from the administrators or the company?
The administrators. Assets went to auction.Company B put a horrendously cheeky bid in for the assets of Company A (£50k for £500,000 of stock) and Company C bagged it for not a lot more.
Former Director of Company A and current Director of Company C is now struggling to sell these assets because Company B is now run by former employees of Company A who left, resulting in the downfall of Company A.
AyBee said:
Sorry, I meant did he buy the company from the administrators or the assets from the administrators, i.e. if he pulled out your old employment contract, the only link between the name of the company on the contract and his company is that he was previously director or the old company and is now director of the new one? Seems laughable that he'd even attempt this if that were the case?
That's the case. He bought the assets only.Company C is as much a successor to Company A as Company B is...
Up to now the Directors of Company B have resisted responding to the letter but what they really want to do is draw a huge penis on the letter and send it back...
Obviously I have no involvement in this
IANAL and Breadvan will hang me out to dry I'm sure but.... If Company A had a contract to supply a million widgets to Widget Users Anonymous Ltd and they purchased that contract with the assets I'd have thought they could fulfil that contract. Is there a difference when the assets they purchase also includes your non compete contract? I think maybe it could - depends exactly what they did and didn't buy I'd have thought.
Breadvan
Breadvan
This looks like a weak try on. The claim could only have some legs if company C has taken a lawful assignment of the contractual or other rights that Company A had against the former employee. By other rights I mean things such as database rights and rights arising from breaches of confidence or fiduciary duty. I would rather doubt that that has happened.
The letter is written in a blustering manner and does not look to have been based on much or any sensible lawyer input.
I never believe in ignoring such letters, or in responding to them in an abusive or scornful manner. Respond in a civil manner that says get lost but pleasantly. Write any letter with a view to it being read by a Judge (even though it is unlikely that this blah will get anywhere near a Judge).
If the situation develops, lawyer up. PM me for the names of suitable lawyers good at acting for SMEs at sensible rates. My current fave is David Archer at Pitmans in London and Reading.
The letter is written in a blustering manner and does not look to have been based on much or any sensible lawyer input.
I never believe in ignoring such letters, or in responding to them in an abusive or scornful manner. Respond in a civil manner that says get lost but pleasantly. Write any letter with a view to it being read by a Judge (even though it is unlikely that this blah will get anywhere near a Judge).
If the situation develops, lawyer up. PM me for the names of suitable lawyers good at acting for SMEs at sensible rates. My current fave is David Archer at Pitmans in London and Reading.
See below some broad and general observations, not intended as exhaustive summary of the law.
Contracts can sometimes be assigned. There usually needs to be an express term permitting assignment.
Causes of action (ie the right to sue someone for a civil wrong) can sometimes be assigned. The assignment of a bare right to litigate is not usually valid, but an assignment that has some real commercial context may be valid
Questions: Did Company C buy not just the assets but also the undertaking of Company A? Did C buy the undertaking as a going concern?
Contracts can sometimes be assigned. There usually needs to be an express term permitting assignment.
Causes of action (ie the right to sue someone for a civil wrong) can sometimes be assigned. The assignment of a bare right to litigate is not usually valid, but an assignment that has some real commercial context may be valid
Questions: Did Company C buy not just the assets but also the undertaking of Company A? Did C buy the undertaking as a going concern?
I find this bit odd too: "immediately withdraw from all areas of commercial competition with Company A and it's successor entered into prior to December 30th 2016 as such activity is in breach of your personal contractual responsibilities." - does your line of work involve long tenders such that activity that started over 6 months ago is still relevant?
If the person who set up B held a position at A that was fiduciary (ie he or she was a director, or was so senior an employee as to be a fiduciary), then there might be an argument that taking for B a business opportunity that came to the person while in a fiduciary role for A would be wrongful.
The administrators of A would have the beef about that, unless they assigned A's breach of fiduciary duty claim to B, and did so in a way that was not the assignment of a bare right to litigate.
The administrators of A would have the beef about that, unless they assigned A's breach of fiduciary duty claim to B, and did so in a way that was not the assignment of a bare right to litigate.
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