Restrictive covenants often sit quietly in the middle of a sale agreement until they are relied upon. The High Court’s decision in Spill Bidco Ltd v Wishart is a timely reminder that, when structured properly, these provisions provide real value and are enforceable against sellers who step too close to the line.
This case does not change the law, but it reaffirms the strength of non-compete clauses in a sale context and highlights how easily they can be breached in practice.
What happened?
After selling his business, the founder agreed that he would not be “engaged, concerned or interested” in any competing venture. He took no formal role in a rival business (no shares, no directorship, no employment). Yet he later provided financial support, introductions and behind-the-scenes assistance to new competitors established by former colleagues.
The Court held that this practical involvement was enough to breach the covenant. What mattered was the real-world effect of his support, not whether he appeared on a company register.
Why this ruling matters
- The Court enforced the covenant in full, confirming that well-structured restrictions remain robust tools to protect goodwill in a sale.
- Involvement does not need to be visible (informal support can amount to competition).
- The judgment reinforces a substance-over-form approach: titles are irrelevant if behaviour helps a competing business gain traction.
For buyers, this provides confidence that non-competes can genuinely safeguard value post-completion. For sellers, it is a cautionary note that even well-intentioned involvement with former colleagues may have contractual consequences.
Practical implications for parties to a transaction
While every deal is different, parties should expect the following themes to grow in importance:
- Clear agreement on what constitutes competition
Ensuring both sides understand the scope of restricted activities reduces disputes later. - Awareness and education post-completion
Sellers should receive clear guidance on what conduct is restricted. A quick conversation early on can prevent expensive litigation later. - Consideration of future plans
If a seller intends to continue in the sector in some capacity (even peripherally) this should be discussed upfront and reflected appropriately in the agreement. - Monitoring and communication
Buyers may wish to put light-touch processes in place for queries or approvals, while sellers should proactively seek clarification before offering support to related ventures.
These are not purely legal steps, they are practical governance tools that preserve value, relationships and expectations on both sides.
A simple takeaway
Restrictive covenants are worth more than the paper they are written on, provided they are thoughtful, commercially aligned, and respected in practice. Spill Bidco reinforces that:
A non-compete is only secure if it is both well-structured and well-understood.
For anyone involved in buying or selling a business, the lesson is clear: treat post-sale restrictions as strategic protections, not boilerplate clauses, and ensure everyone around the deal understands where the boundaries lie.
If you are considering a sale or acquisition, reviewing existing covenants, or planning future involvement in your sector post-exit, our Corporate Commercial team would be happy to support you in navigating these issues and protecting your commercial position.
