Client found not to breach his contract or post termination restrictive covenants

19 October 2011

Our client left a global financial trading house to join as an equity partner at a well known hedge fund. He had signed the LLP agreement and was due to invest a significant amount of capital in the partnership. However, shortly after joining the new fund he realised that things were not as he expected and not as he had been promised. As a result he left without making an investment and without serving notice, both of which were potentially serious breaches of the partnership agreement.

He also started immediately with a competitor, again potentially in breach of post termination restrictive covenants. We were able to argue successfully on his behalf that as he had not made the investment he had not become a full member of the partnership, so that terms could not be enforced and in the alternative, the client had only signed the partnership agreement following representations that proved to be false. We advised that as a result the post termination restrictions would also be unenforceable. In the end the partnership accepted the position and released the client and paid his outstanding expenses.