Non-compete clause

Cody4

Hi all,

Bit of a long story but would appreciate your opinions on this. I'm not looking for legal advice and I know I will need to speak to a professional.

I was employed by company a and left after a few weeks. I was then employed by company b (owned by the same group that owns company a). I left company b after a few months to set up a business selling one product that was part of company's b product range.

I am now been threatened with legal action under the non-compete clause I signed when I joined company a and was told I will receive a cease and desist letter in the post.

Few points:

I didn't get a new or amended contract when I joined company b even though I was told I would by one of company's b directors.
Both companies are operating in completely different markets.

So do you think this could go to court and would they have a good chance of winning?

Stheno

Generally non-compete clauses are hard for companies to fight, but there is no defnite yes or no.

You'd be best off seeking legal advice imo

Cody4

Thanks for the reply. Yes I will be doing that asap.

Stheno

Cody4 wrote: »

Thanks for the reply. Yes I will be doing that asap.

Good luck!

I've said legal advise as my experience of non-compete clauses is in knowledge based and not product based areas, so I suspect you need it

Mrs OBumble

As well as what's right, you also need to consider which of you can afford better lawyers and a fight. Sometimes the big fish wins due to size rather than fairness.

Beano

Perhaps you can clarify something?

You worked for company A
You left company A after a few weeks
You then went to work for Company B

Is that correct? that the employment with company A and the employment with company B were entirely separate? Or did you transfer from company A to company B?

Cody4

Beano wrote: »

Perhaps you can clarify something?

You worked for company A
You left company A after a few weeks
You then went to work for Company B

Is that correct?

Yes that is correct.

that the employment with company A and the employment with company B were entirely separate?

Or did you transfer from company A to company B?

Initially I was told that I would have a new contract for company b but I never received or signed one. There was no written confirmation or transfer of any kind stating that I was working for company b. I continued getting paid by company a.

I know there is never a straight answer to these types of questions but I don't see how they can enforce a contract that I signed for a separate company. My contract for company a has no mention whatsoever for company b or it's business.

davo10

Cody4 wrote: »

Yes that is correct.





Initially I was told that I would have a new contract for company b but I never received or signed one. There was no written confirmation or transfer of any kind stating that I was working for company b. I continued getting paid by company a.

I know there is never a straight answer to these types of questions but I don't see how they can enforce a contract that I signed for a separate company. My contract for company a has no mention whatsoever for company b or it's business.

If you were paid by company a while working for b and they are both owned by the same employer, were you not just changing positions within the same organisation?

This all depends in how far your previous employer wants to take it and how concerned they are about the effect of your business on theirs. If you signed a non compete clause then they may have a case but only a solicitor will be able to advise you. You might be advised here that. "They are not worth the paper they are written on" but it would be a huge gamble on your part to accept this at face value, talk to a solicitor asap.

irish_major

But essentially you worked with a company and took their product and started selling it as your own?

Cody4

irish_major wrote: »

But essentially you worked with a company and took their product and started selling it as your own?

It's not their product. It's a product that they sell as part of their range.

Mr. Loverman

I know someone who went through something similar to this. A family friend was one of Ireland's top lawyers.

The lawyers advice was to not get a lawyer involved. The company are hoping you get a lawyer involved. They want to drag you into an expensive fight so you back down.

Do you have any dirt on the company? That will make this go away.

davo10

Mr. Loverman wrote: »

I know someone who went through something similar to this. A family friend was one of Ireland's top lawyers.

The lawyers advice was to not get a lawyer involved. The company are hoping you get a lawyer involved. They want to drag you into an expensive fight so you back down.

Do you have any dirt on the company? That will make this go away.

Every situation is different. If OP takes your advice it is tantamount to ignoring their warning which he does at his peril, plus he could be exposing himself to other legal problems if he spreads malicious gossip about his previous employer.

OP, you are selling a product in direct competition to your previous employer even though you signed a non compete clause, this is very different from just going to work for a competitor. You need legal advice before you invest capital in your business, it could be a very costly mistake if your ex employer persues you and wins. All companies start out small and they may be concerned you have contacts of their clients and info about the prices they are selling their products at, allowing you to undercut them and achieve a foothold in the market. If they are a big company, they will not mind what it costs to crush you, it will be better than losing market share in the long term so spend money now getting the necessary advice or risk losing it all later.

racso1975

How long can a non compete cause exist for?

Keeping this in mind what is to stop the op's wife from selling this product while he works elsewhere? Given there is obviously a market for this

Mr. Loverman

By all means he can get a solicitor to advise on the content of his responses, but he does not want to enter into a situation where their solicitor is sending letters directly to his solicitor. They will know he's then in the system; he's in a much more powerful position if they believe he is outside the system. For starters, the company's solicitor has to be much more careful about the content and tone of their letters.

The OP needs to jog his memory and find some dirt. That is his silver bullet.

Cody4

Do you have any dirt on the company? That will make this go away.

I do and will use it if I have to.

Any non-compete clauses I've seen for a company within a group cover all group companies.

Sorry, I made a mistake in the OP. The two companies share a director but they are not part of company a's group.

irish_major

But you're still essentially stealing one of their products?
Baffling how you could think you're in the right here

Cody4

But you're still essentially stealing one of their products?

How is it stealing one their products? It's not their product! Anyone can sell it.

Baffling how you could think you're in the right here

Because I didn't sign a contract when I joined company b and its a separate legal entity to company a.

Beano

Cody4 wrote: »

Yes that is correct.





Initially I was told that I would have a new contract for company b but I never received or signed one. There was no written confirmation or transfer of any kind stating that I was working for company b. I continued getting paid by company a.

I know there is never a straight answer to these types of questions but I don't see how they can enforce a contract that I signed for a separate company. My contract for company a has no mention whatsoever for company b or it's business.

If you were still getting paid by company a then you were still working for company a. in that case the non-compete would still apply.

Cody4

Beano wrote: »

If you were still getting paid by company a then you were still working for company a. in that case the non-compete would still apply.

Sound, thanks.

leeroybrown

Get some real legal advice. You won't get it here and your situation is very complicated since you're running your own business. If you were just a normal employee I'd tell you to ignore it and wait to see if they seek a legal injunction preventing you from working in the sector but this is a whole different mess.

davo10

Cody4 wrote: »

I do and will use it if I have to.

If you "use it" by maliciously informing or threatening to inform a customer of your former employer about some "dirt" you think you have, and this effects an agreement or contract, you leave yourself open to a charge of tortious interference. If the customer then tells your employer what you said (which is highly likely if they have a long standing relationship), brace yourself for the blow back. Think very carefully about the consequences of using "dirt" unless you can prove your accusations beyond a doubt.

Cody4

Get some real legal advice.

Thanks for the advice. Spoke with a solicitor today.

Mr. Loverman

davo10 wrote: »

If you "use it" by maliciously informing or threatening to inform a customer of your former employer about some "dirt" you think you have, and this effects an agreement or contract, you leave yourself open to a charge of tortious interference. If the customer then tells your employer what you said (which is highly likely if they have a long standing relationship), brace yourself for the blow back. Think very carefully about the consequences of using "dirt" unless you can prove your accusations beyond a doubt.

That's not how you use dirt.

Simple example: you forced me to download and install pirate software, making me an accessory to a crime.

Duckett

looks like a problem to me - you leave and knowingly start to sell the same product to a common market (maybe even common customers). What had you expected - some elapsed time between parting from a and b and entering the market would be less expensive then going the legal route!!