Covenant not to solicit Customers or Persons "in the habit of dealing March 1. with the company" — Reasonableness of Restriction. 181] has decided, by a judgment delivered by Lord Macclesfield, within what limits and terms the Court will enforce such agreements. 377, 385], it would not be possible to object to the injunction going against the company. Now this action is brought by the plaintiffs, the Gilford Motor Company, Ltd., to enforce the terms of clause 9 of the agreement of May 30, 1929, on the ground that the defendant Horne, and the company, as his agent and under his direction, have committed breaches of the covenant which I have read. There was a provision in his contract that stated if he left the company, he promised not to compete with it OHANCEEY DIVISION. Let me just add one further passage from Mason v. Provident Clothing and Supply Co. [(1913) A.C. 724, 741]. Change ), You are commenting using your Facebook account. o Avoidance of legal obligations - In Gilford Motor Co. Ltd v Horne [1933] Ch 935, Horne left the Gilford Motor Company in order to set up his own business. Clause 9 of the agreement provided that: “The managing director shall not at any time while he shall hold the office of a managing director or afterwards solicit, interfere with or endeavour to entice away from the company any person, firm, or company who at any time during or at the date of the determination of the employment of the managing director were customers of or in the habit of dealing with the company.” The employment of the defendant as managing director was determined in November 1931, by an agreement between the parties under which the defendant was to receive a fixed sum payable in instalments. in Smith v. Hancock [(1894) 2 Ch. The only test of the validity of an agreement in restraint of trade now is whether or not such an agreement is reasonably necessary for the protection of the person with whom it is made”, and, as pointed out on p. 475 of the first volume of Smith’s Leading cases, dealing with the Nordenfelt Co. case, which went to the House of Lords, the true view is “that any restraint, whether general or partial, is prima facie invalid, but may be good if the circumstances of the case show it to be reasonable.” We have, therefore, to consider: Were the terms of this covenant in clause 9 reasonable? Return to "Gilford Motor Co Ltd v Horne" page. Facts • Mr EB Horne was an ex-company managing director. I do not so read the letters or the entry in the minute book. Facts Mr Horne was a former managing director of Gilford Motor Home Co Ltd (Gilford). Gilford Motor Company Ltd 1926-1935 3 The origins of the Gilford Motor Company can be traced back to the post First World War period, when E. B. Horne set up in business to sell former military chassis, principally of Garford manufacture. It is intended to deal with persons who are upon their books, or with whom they deal and, in the course of dealing, earn a profit. The solicitor of the company was the writer of that letter of March 29 which I have already read. #casestudies#clicktoeducate#companylawFamous case of lifting of corporate veil , avoidance of legal obliģation of contract Gilford Motor Co., Ltd. v. Horne (1933) 1 Ch. But, however that may be, we have to say that the plaintiffs are entitled in this action to have this covenant upheld, and an injunction is the proper mode of enforcing that as against these defendants. Jones v Lipman [1962]1 WLR 832. When he left he agreed that he would not solicit any of his former employer’s customers. 935. Horne’s copy of the original service agreement with this company was left with the writer for safe custody; therefore we have pleasure in enclosing it herewith.” Thus the solicitor was on March 30 placed in possession of the agreement of which I have read some and indicated other portions of the terms. GILFORD Motor Company Ltd. Change ), You are commenting using your Google account. OHANCEEY DIVISION. William C. Leitch Bros Ltd., (1932) 2 CH 71 (ChD). ( Log Out /  Gilford Motor Co., Ltd. v. Horne (1933) 1 Ch. The origins of the Gilford Motor Company can be traced back to the post First World War period, when E. B. Horne set up in business to sell former military chassis, principally of Garford manufacture. 70% of Law Students drop out in the UK and only 3% gets a First Class Degree. It appears to me that a customer is a person who frequents a place of business for the purpose of making purchases, and those persons may be determined in a particular way by, for instance, having their names recorded in the books of the company, or they may be upon a list, but there may be other persons who are in the habit of dealing with the company but whose names have not yet been inscribed upon any register of customers, and I see no reason at all to object to the employment of both those terms by reason of the fact that one or other of them might have covered persons who are to be found in the alternative category. 1418.] Get a first class law degree with our help! Education. The particulars of Gilford Motor Co Ltd v Horne (1933) are comparable to the facts of this case. Gilford Motor Co V S Horne(1933) Horne was appointed Managing Director Gilford Motor Co 6-year term. 1 Ch. Admission has been made quite frankly and candidly in this Court, as it was made below, that there have been circulars sent out to the customers of the Gilford Motor Company. When he left he agreed that he would not solicit any of his former employers customers. The managing director was to devote his whole time and attention and abilities during business hours to the company and the business of the company; he was entitled to certain holidays; he was entitled to a remuneration of £ 1,250 a year and to a certain percentage on the profits; and during that time he was not to be, directly or indirectly, in any capacity except as a shareholder, interested in any business or company other than the Gilford Company. Gilford Motor Co, Ltd v Horne and another - [1933] All ER Rep 109 ELECTRONIC RESOURCE Recommended reading for question 1. These vehicles were sold either under the original mabnufcturer's name or under the Gilford brand. Kapila Hingorani v. The two classic cases of the fraud exception are Gilford motor company ltd v. Horne and Jones v. Lipman. Gilford Motor Co Ltd v Horne. Mr. Horne was earlier the managing director of Gilford. The defendant was the plaintiff’s former managing director. In his employment contract, he was prohibited from soliciting the customers of Gilford in case he leaves their employment. Toulson J in Yokong Line at 308. Horne” was incorporated. Horne”, he became anxious as to whether or not what he was doing was in contravention of the agreement which he had entered into and to which I have referred, and so it was that on March 29, 1932, his solicitor wrote this letter to the Gilford Motor Company: “Dear Sirs, I am acting for Mr. E.B. Ïş¶Û¿Ú¬®oWO_àß=»m3ştK3şt¹º9]? Case: Gilford Motor Co Ltd v Horne [1933] Ch 935. – In this case a business was carried on by the Gilford Motor Company, Ltd., which had a registered office in Holloway Road, London, and a manufacturing place in Green Lanes, High Wycombe. I, therefore, proceed now to consider those two points in order, and, first: Is the covenant unenforceable as being bad in law? Case: Gilford Motor Co Ltd v Horne [1933] Ch 935. The plaintiff company bought the various parts of motor … <1A. ), that persons buying spare parts from the plaintiff company, paying for them in cash and taking them away, would be included in the covenant; that the defendant, as managing director, would not come into contact with those customers and would not know them or their names and addresses and that, therefore, the covenant was too wide. In these circumstances the appeal must be allowed, and for the reasons which I have already stated I think the injunction must go against the company. This was evident in Gilford Motor Co Ltd v Horne where a managing director agreed not to engage with his former employer’s customers but proceeded to do so through a newly formed company. William C. Leitch Bros Ltd., (1932) 2 CH 71 (ChD). WTLR Issue: Spring 2020. 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