AGRI ENERGY v. IAN LOGAN McCALLION [2014] ScotCS CSOH_14 (28 January 2014)

AGRI ENERGY v. IAN LOGAN McCALLION [2014] ScotCS CSOH_14 (28 January 2014)

The restrictive covenant was reasonable in both area (Scotland) and duration (five years), given the nature of the business, the arm's length negotiation, the significant price paid for goodwill, and the legitimate interest of the purchaser in protecting the value of the business acquired. The parties freely negotiated the terms, and the restriction was not excessive in the circumstances.

Citation
[2014] ScotCS CSOH_14
Parties
Pursuer: Agri Energy; Defender: Ian Logan McCallion
Jurisdiction
Scotland
Judgment Date
28 January 2014
Procedural Posture
Commercial Action (enforcement of Restrictive Covenant) / Procedure Roll (interim Hearing on Reasonableness of Covenant)
Outcome
Defender's motion to dismiss refused; case to proceed for further determination of future procedure; expenses reserved.
Legal Topics
Reasonableness of Restrictive Covenants, Sale of Business, Non Compete Clauses, Goodwill Protection
Contract Law Commercial Law Restrictive Covenants Reasonableness of Restrictive Covenants Sale of Business Non Compete Clauses Goodwill Protection

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Parties

Agri Energy

Pursuer

Ian Logan McCallion

Defender

Procedural Posture

Commercial Action (enforcement of Restrictive Covenant) / Procedure Roll (interim Hearing on Reasonableness of Covenant)

Legal Issues

  1. 1 Whether the restrictive covenant in the sale agreement is reasonable in scope (area and duration) and enforceable against the defender

Ratio Decidendi

The restrictive covenant was reasonable in both area (Scotland) and duration (five years), given the nature of the business, the arm's length negotiation, the significant price paid for goodwill, and the legitimate interest of the purchaser in protecting the value of the business acquired. The parties freely negotiated the terms, and the restriction was not excessive in the circumstances.

Court Disposition

Defender's motion to dismiss refused; case to proceed for further determination of future procedure; expenses reserved.

Orders

  • Refusal of motion to dismiss the action
  • Case put out by order for future procedure