Marketing firm entitled to enforcement of non-compete clause

The High Court has upheld a marketing company’s restrictive covenant preventing its sales advisors from competing with it for a six-month period.

The case involved Credico Marketing Ltd v Lambert.

Credico provided direct marketing services which were conducted by independent sale advisors (ISAs) by methods such as door-to-door sales.

It did not contract directly with the ISAs but rather through marketing companies (MCs) who would then engage the ISAs. MCs were invariably owned by an individual who had started off as an ISA and had been nurtured by an MC until they were ready to start up their own MC.

Credico would provide ready-made campaigns to the MCs and substantial back-office support including bookkeeping.

The defendant in the case, Mr Lambert, started as an ISA before setting up his own MC. In doing so, he entered into a standard trading agreement, which contained two restrictive covenants.

These prevented Lambert from being involved in any similar type of business while the agreement lasted and for six months following termination of the agreement.

The Covid-19 pandemic had a damaging effect on the direct marketing business and Credico was unable to provide suitable campaigns, so Lambert started doing work for other clients.

Credico warned him to stop and threatened to terminate their agreement if he failed to do so. Lambert agreed and signed a new undertaking after deleting some of the restrictive paragraphs. Two weeks later, he served notice of termination of the agreement.

Credico successfully applied to the High Court for an injunction to uphold the restrictive covenant to prevent Lambert from carrying on a similar type of business for six months.

The court held that the undertaking signed by Lambert amounted to a binding contract. The fact that he had omitted certain paragraphs did not mean that the obligations ceased to exist.

There was a public interest in holding parties to agreements that they made while attempting to compromise threatened legal proceedings. The undertakings were enforceable.

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Credico Marketing Ltd v Lambert
Queen’s Bench Division
4 June 2021
[2021] EWHC 1504 (QB)
Cavanagh J