Inconsiderate Variation

The Case: Re-Use Collections Limited v Sendall & May Glass Recycling Limited

In the case of Re-Use Collections Limited v Sendall & May Glass Recycling Limited, the court was asked to consider if valid consideration had been given to support a new restrictive covenant introduced during the course of employment. The court decided that no consideration had been given and it refused to uphold restrictions, which in any event, it found to be unenforceable for other reasons. However, the court did find that Mr Sendall had acted in breach of his contract of employment and awarded damages to his former employer.

The case highlights the need to ensure that when changes to terms of employment are proposed an employee should be given something real and of value in exchange for the obligations in the new contract, particularly where restrictions are being introduced.

Any valid contract requires the parties to give each other something to support their agreement. This "something" is referred to in legal terms as "consideration". In commercial contracts, the courts have tended not to assess the value of any such consideration, recognising that the parties are best place to determine for themselves the relative value of the bargain. This legal doctrine of consideration also applies to contracts of employment and variations to such contracts. But as is often the case the legal principles that apply to commercial contracts are not always...