Failure to advise on the absence of a covenant in restraint of competition constitutes negligence

The High Court has held that a solicitor, who acted for the purchasers of a leasehold pub business, was negligent in failing to advise the purchaser that the contract did not contain a covenant by the sellers in restraint of competition.

Three months after completion of the purchase, the sellers took over another public house three miles away from the business they had just sold.

The purchasers believed that the sellers’ clientele decided to follow them, which led to a severe decline in the profits of the purchasers’ public house, and to the ultimate failure of their business venture.

The case is a salutary reminder to any prospective business purchasers of the importance of insisting on the incorporation of a reasonable restraint of trade clause in their purchase agreement.

Written by Craig Oliver, Solicitor.

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Stokes Partners LLP can advise you fully in respect of the terms of any proposed business purchase. For more information, please contact Craig Oliver in our Corporate Commercial team: [email protected]  or 01460 279293

If you find yourself in the unfortunate position of the purchasers as in the above case, please contact our dispute resolution team on 01460 279279 for advice on the options available to you.