Question
You are instructed by Abelwe Sogoni, who tells you that late last year she bought a gardenservices business from Leonard Loots, who wanted to retire
You are instructed by Abelwe Sogoni, who tells you that late last year she bought a gardenservices business from Leonard Loots, who wanted to retire as he was no longer physicallyable to do the job. She paid R250 000 for the business, after taking out a loan with ABSABank, which she will have to repay for many years. She was happy to pay this amount, whichincluded office furniture and computers, workshop tools, lawnmowers and other equipment,and she was able to take over the very cheap lease agreement with the owner of the building.
Most importantly, it was agreed that she would keep all the customers that Leonard had builtup over the period of about 15 years that he had had the business, which had generally beena great success. Also, his was the only garden services in Grahamstown, so Abelwe was sureto make money as she would have no competition.
Fortunately, she hired a lawyer to draft a contract before they finalized the sale. The lawyerinsisted that she include a clause in the contract that stated that Leonard would not bepermitted to have a garden services or similar business in Grahamstown for a period of fiveyears after the sale, nor would he be allowed to have an interest in such a business.
At first Leonard seemed to enjoy his retirement, but then he got bored and last month startedadvertising that he would soon be back in business offering landscaping services. Abelwe isnot aware of anyone offering such specialist services in Grahamstown before, but she thinksthat it will include regular garden services as well.
Abelwe is extremely worried because she believes that many of Leonard's former customerswill follow him, and so their business will be lost to her. Leonard is so well known inGrahamstown, and this was the very reason why the lawyer insisted on this clause in thecontract, which Leonard signed!
Draft your plan of the answer you would give to Ms Sogoni in whichyou advise her on what she can do to stop Leonard from opening this business.
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