There are times, after a contract is signed, that certain covenants within the document are no longer desired by one of the parties. They are largely restrictive covenants that have a detrimental or limiting effect on how an individual can behave, or what an individual's property can be used for.
In our guide to how to amend or remove a restrictive covenant, we fully explain what a restrictive covenant is. In doing so, you will be able to identify what the restrictive covenant is in any documentation, so if needed, you can choose the right path in having it either amended or totally removed.
What is a restrictive covenant?
As briefly mentioned above, a restrictive covenant limits how a person can act or how tangible or intangible property can or may be used. A good example would be what an employee is allowed to do after he or she stops working for a company. It is commonly seen that a company will often put a clause in employment contracts that limit what an employee can do with regards to starting up a company within a specified length of time from leaving the original firm. Another example is a restrictive covenant that will prohibit an ex-employee from interacting and soliciting with the past customers of a previous company.
They are also commonly seen in the realms of property or land. Restrictive covenants may detail what property or land is or is not allowed to be used for, as well as when.
How to remove a restrictive covenant
To remove a restrictive covenant from a contract, you need to make an application to have it removed. In the first instance, it is possible to make an application to the other party in the contract. There are no guarantees that this will work, however. What it could mean though is negotiations are entered into to amend the restrictive covenant.
In some cases, where the restrictive covenant affects a property, the beneficiary of the covenant may no longer be alive. In such cases, making an application to the Upper Tribunal may be successful.
How to amend a restrictive covenant
Amending a restrictive covenant is almost as tricky as removing one entirely. They have often been inserted into contracts for good reason, but it is not impossible. Through proper negotiations, it is possible for restrictive covenants to be amended by the party who enforces it through written release. So it has a very similar process to having a restrictive covenant removed.
Restrictive covenants - key takeaways
Removing or amending restrictive covenants in contracts can be a tricky process. Be prepared - the whole procedure can take well over a year until it is completed before starting out. Here are a few key takeaways:
- Weight up the cost versus return
- Try and agree a deal outside of the courts
- Factor the time it can take