Non-compete clause in SPA was unenforceable (Ivy Technology Ltd v Martin)

Article summary

Commercial analysis: This case concerned a share sale in which the defendants had made misrepresentations as to the earnings and profitability of a gambling business. The court found that a co-defendant who was not party to the sale and purchase agreement (SPA) was nonetheless liable for fraudulent misrepresentations made by the shareholder in selling the business. The shareholder had the actual, alternatively, the apparent authority of the co-defendant to make the misrepresentations as his agent. A further claim for breach of a non-compete clause in an SPA was dismissed as the relevant clause was unenforceable. The clause was both too long in duration and too broad in scope, and insufficient evidence was submitted to justify it. The court was not prepared to rescue the clause using the 'blue-pencil' test, without having submissions on how it should do so. Written by James Lancaster, managing associate at Trowers & Hamlins LLP.