The UK High Court holds that an unlawful non-compete clause cannot be severed from the exclusive distributorship agreement if such severance would destroy the fundamental nature of the agreement (Courage)

A. Introduction In its judgment of 1 March 2006 the England and Wales High Court (Commercial Court) ("the High Court") made an important ruling on the severability of a non-competition clause in the context of the termination of an exclusive distributorship agreement. The High Court held that a unlawful non-compete clause [1] cannot be severed from the exclusive distributorship agreement if such severance would destroy the fundamental nature of the agreement. The High Court considered that, as a matter of interpretation and law, the non-compete clause was integral to the main consideration or the whole (or substantially the whole) consideration for the promise of exclusive distributorship. As it was deciding on summary application, the High Court did not have to decide whether the

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  • United Kingdom’s Competition Authority - CMA (London)

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Sandrine Delarue, The UK High Court holds that an unlawful non-compete clause cannot be severed from the exclusive distributorship agreement if such severance would destroy the fundamental nature of the agreement (Courage), 28 March 2006, e-Competitions March 2006, Art. N° 21120

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