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Thomas
Thomas, Lawyer
Category: UK Law
Satisfied Customers: 7543
Experience:  BA (Hons), PgDip, Practising Solicitor
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Im a Complementary Practitioner and hire premises to

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I'm a Complementary Practitioner and hire premises to practice. On 27 July 2012 was asked to sign a rolling Contract with one months notice period. I am being offered potential alternative premises in the same location (less than 5mile radius). 1 clause in the Contract is now causing me concern. "the Practitioner undertakes to procure that (except as otherwise agreed in writing), neither the Practioner nor any party connected to the Practitioner (including a company indirectly or directly owned by the Practitioner), will either directly or indirectly and either solely or jointly with any other person (either on its own account or as the agent of any otherperson) and in any capacity whatsoever for a period of 12 months from termination of these T & cS CARRY ON, ESTABLISH OR HAVE ANY SHARES IN A BUSINESS WHICH COMPETES WITH THE TYPE OF BUSINESS CARRIED ON BY ..... (A MULTI-DISCIPLINARY CENTRE OFFERING A VARIETY OF THERAPIES) AT TERMINATION OF THESE t & Cs within a 5 mile radius. I am self-employed and rent premises, have they the right to stop me moving my practice, which is a sole practice to another centre in the same location? The Contract was signed on 27 July 12 can I terminate, as has been in effect for less than 1 month? Thank You Francesca xxxx

Hi
Thanks for your question/n .

For clarity and the avoidance of doubt, could you please respond to the following USING THE SAME NUMBERING:-
1. Are other parts of the building leased to other complementary practitioners or similar trades?
2. Did you simply take a lease from the landlord and NOT purchase a business from him?
3. Is there a fixed term for the lease or is it from month to month only
Kind regards.

Tom
Customer: replied 4 years ago.

1. yes


2. Lease only - rolling Contract mothly basis. Have not purchased business.


3. Month by month basis

Customer: replied 4 years ago.

Hi Tom - have answered your questions 1-3 and sent - awaiting your response, thank you for your assistance.


Francesca

Hi Francesca,

I'm having connectivity issues here.

When did you first occupy the premises please?

Tom
Customer: replied 4 years ago.
First joined September 2007. The new Contract just issued July 2012
Hi Francesca,


Thanks for your reply.

It is quite unusual to find a clause of this type in a rolling contract (which I assume is a tenancy at will, even if the agreement itself is called something else), they are usually to be found in employment contracts or in business sale agreements where it is necessary to protect the goodwill of the selling business.

Such clauses are enforceable only to the extent that they protect the legitimate business interest. 12 months is a pretty standard length, but 5 years is a touch on the high side.

To successfully claim against you he would have to demonstrate that his business would suffer if you started a practice within the area. If the business of the landlord is letting property to similar trades then he would have to show that he was deprived of a tenant because you started trading elsewhere or as a result of you trading elsewhere other tenants were not able to pay their rent and he suffered.

This would be fairly tricky to prove. Usually clauses like this are relied upon by someone who has bought a business because they seller has started a business elsewhere and the profit has dropped markedly. In this case he has a further level to prove because it’s not him that would suffer directly, it would be the other tenants in theory and only if they ceased paying him rent but if the other tenants did not suffer then I cannot see how he could be 100% confident in issuing a claim against you because the loss would be either too difficult to prove or too remote.

I would also argue that the clause is not proportionate because you only have the benfit of a rolling contract and not a long fixed term.

The principle is that these clauses are governed by balancing a legitimate business interest with the legal principle that one should not restrain the trade of another. I would say that the balance is tipped in your favour on this one.

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Kind regards,


Tom
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