Binding Out Clause

Re: Binding Out Clause

J G Wray — Sat, 22 Oct 2011 09:48:52 GMT

[quote user="SteveOwen"]...his..[/quote]

Re: Binding Out Clause

SteveOwen — Fri, 21 Oct 2011 19:51:06 GMT

[quote user="J G Wray"]

Ref the lease. Simple question for your solicitor. Has the lease been granted within or outside the provisions of the landlord and tenant act 1954 part2?

If within then there is a protected tenancy and there will be a right to renew. If not then probably not. The clue will be in the lease itself.

By the way, An on, what's your name? I give you something, why don't you give something back? What's wrong with telling us who you are?

JGW

[/quote]

It's highly questionable that you have given him/her something. But if his anonymity is a problem for you: why not just not keep your profound wisdom to yourself?

Re: Binding Out Clause

Gerry Henry — Fri, 21 Oct 2011 09:28:26 GMT

[quote user="J G Wray"]

Ref the lease. Simple question for your solicitor. Has the lease been granted within or outside the provisions of the landlord and tenant act 1954 part2?

If within then there is a protected tenancy and there will be a right to renew. If not then probably not. The clue will be in the lease itself.

By the way, An on, what's your name? I give you something, why don't you give something back? What's wrong with telling us who you are?

JGW

[/quote]

Fairly obvious I would have thought.

Re: Binding Out Clause

J G Wray — Thu, 20 Oct 2011 23:17:00 GMT

Ref the lease. Simple question for your solicitor. Has the lease been granted within or outside the provisions of the landlord and tenant act 1954 part2?

If within then there is a protected tenancy and there will be a right to renew. If not then probably not. The clue will be in the lease itself.

By the way, An on, what's your name? I give you something, why don't you give something back? What's wrong with telling us who you are?

JGW

Re: Binding Out Clause

Gillian Mostyn — Thu, 20 Oct 2011 18:32:36 GMT

[quote user="Bob Russell"]The planners told me not to bother applying as the planners would not allow a change of use from light industrial to retail![/quote]

In most councils a veterinary practice is not classed as retail but is actually in it's own specific band (certainly in both councils we have dealt with.) That is why, generally, regardless of previous use, you always have to get change of use planning permission.

Re: Binding Out Clause

Hannah Wynne Richards — Thu, 20 Oct 2011 18:26:45 GMT

4 years a bit excessive 10 miles-depends on practice-excessive for purely SA,but I once worked in a very extensive hill-farming practice in Llandrindod-practice radius was approx 25 miles, so 10 miles wouldnot really protect employer's interests

Wynne

Re: Binding Out Clause

Rob Loxley — Thu, 20 Oct 2011 18:21:24 GMT

[quote user="newgradvet"]My contract just for employment as an assistant vet is 10 miles and 4 years.[/quote]

Sounds very excessive!

Re: Binding Out Clause

Claire McConnell — Thu, 20 Oct 2011 13:46:39 GMT

My contract just for employment as an assistant vet is 10 miles and 4 years. I feel pushing for 5 years sounds ok but 25 miles perhaps excessive.

However I am no legal advisor.

Re: Binding Out Clause

Bob Russell — Thu, 20 Oct 2011 13:40:10 GMT

It sounds as if you feel comfortable about the arrangement so time to be rather more positive about it! If you go into this with your eyes open the most important thing is to make sure the price is right!

If you are not buying the premises your long-term commitment and risk is reduced! Go for it, have fun and go with your gut instinct. Try to get 5 years!

Re: Binding Out Clause

Hannah Wynne Richards — Thu, 20 Oct 2011 12:46:10 GMT

I suppose it depends on the council

Wynne

Re: Binding Out Clause

Bob Russell — Thu, 20 Oct 2011 11:42:52 GMT

[quote user="Hannah Wynne Richards"]

I would talk to local council and see if any light industrial units available for lease-usually good parking, and the bank will probably regard favourably

Best option is to buy premises but if funds not available you ned to rent-but not these premises

I can see where your boss is coming from-he'll get very little interest on the purchase price at the moment, so the rent will help his retirement-and he doesn't want you with a long lease in case he later needs to downsize for health reasons-after all he may be 75 in 10 years time, so might want to move to a bungalow/somewhere nearer shops-but rotten deal for you

Wynne

[/quote]

Light industrial units often fall foul of change of use planning restrictions. When i set up there was a perfect unit. Quite large and cheap. It had been empty forever but well maintained. The planners told me not to bother applying as the planners would not allow a change of use from light industrial to retail!

Second opinion practices don't have this problem as they are not classified as retail. I was infuriated that the council would rather have an empty unit than an occupied one!

They still do!

Re: Binding Out Clause

An On MRCVS — Thu, 20 Oct 2011 11:39:46 GMT

[quote user="Eamon McAllister"]Bind him out for 5 years and 25 miles and insist on an option to purchase / first refusal if he decides to sell the freehold and that will test his resolve.[/quote]

That was my thinking.

[quote user="Bob Russell"]You will struggle to get any sort of bank finance with this arrangement because a business plan is likely to be pretty meaningless without the practice premises.[/quote]

HSBC have given the go ahead with the loan.

[quote user="Bob Russell"]Your existing boss should already be aware of this and either is living in cloud cuckoo land (as many vets do) or is trying to pull a fast one (which I think much less likely). [/quote]

I would say cloud cuckoo land! I do trust the bloke 100% but if I'm borrowing a reasonable sum of money then I need the assurance that it's a good investment.

Over the last 4 years the practice profit has remained stable and I would be earning more than twice the money I am on now. I would like to own the property BUT it's a big house and the surgery is a small part of that. The other issue is money. I am already paying a big mortgage on my house and I'm not sure I would want to get into a huge amount more debt buying premises (at this point in my life).

I don't expect him to rush to start working again after 3 years but I want to protect my investment. In a way if the surgery remains in the same place for the moment then it's less of an upheaval for the pet clients and farmers collecting drugs.

I want the arrangement to remain amicable as he is 60 and wants to wind down, but will still give some locum cover when I need it. He's not the money grabbing type (far from it) but sometimes bumbles along and crosses lines he shouldn't. I would say 1/3 of consults he does he charges them nothing, because they are old/he likes them etc.

[quote user="Gerry Henry"]Find your own premises and offer to buy the good will on your terms, if he doesn't like it then just open for business, word will soon get around. Very iffy IMHO.[/quote]

I'd much rather do this in a 'gentlemanly' way and keep people on side, buy a business that making reasonable money and grow that, with the shared 1 in 4 rota etc. I don't fancy slogging it out on call every night. I don't want to have to 'poach' is clients. If he sold to someone else then that's what I would do!

Re: Binding Out Clause

Hannah Wynne Richards — Thu, 20 Oct 2011 11:34:50 GMT

I would talk to local council and see if any light industrial units available for lease-usually good parking, and the bank will probably regard favourably

Best option is to buy premises but if funds not available you ned to rent-but not these premises

Wynne

Re: Binding Out Clause

Bob Russell — Thu, 20 Oct 2011 11:23:59 GMT

Three years is a useless length of lease. The binding out clause is probably unenforceable but a lease on property is not. Without the security of premises you are asking for trouble. Remember it can take many months to find, purchase or lease and fit out premises.

Your existing boss should already be aware of this and either is living in cloud cuckoo land (as many vets do) or is trying to pull a fast one (which I think much less likely).

You will struggle to get any sort of bank finance with this arrangement because a business plan is likely to be pretty meaningless without the practice premises.

Talk to your boss and sort it out properly. I would be looking for a minimum of 10 years stability and the bank may want even more!

Re: Binding Out Clause

Gerry Henry — Wed, 19 Oct 2011 22:52:32 GMT

I am buying my existing boss out of his practice. I have worked here for 5 years. The building (which I will rent) is a converted garage/stables on the owners property that I will rent.

Your practice on his premises with only a 3 year lease, personally I wouldn't touch it. Find your own premises and offer to buy the good will on your terms, if he doesn't like it then just open for business, word will soon get around. Very iffy IMHO.

Re: Binding Out Clause

Alasdair Mathieson — Wed, 19 Oct 2011 20:51:12 GMT

Hi An On,

I happen to know a great deal about binding out clauses, unfortunately, having challenged one not that long ago. What I can tell you is that, per se, a binding out clause is illegal [ restriction of trade ] and therefore, in my view, should never be in a contract or agreement. None of my employees has or ever would have one in their contract. Having said that, if you sign a contract or agreement containing one, you are then legally bound by it. The law is an ass, and they should have been completely banned under contract law a long time ago. The time scale and distance is irrelevant - if you signed, you are bound by the terms. Mind you, in this day and age, only a lunatic or millionaire would take you to court for breaking such a clause. In our profession, there are few millionaires, but a lot of lunatics, so please let me know if I can be any more help.

Re: Binding Out Clause

Mark Holmes — Wed, 19 Oct 2011 20:35:49 GMT

I understand whilst they are generally difficult to enforce they are much more enforceable in the circumstances you describe.

Re: Binding Out Clause

Chris Barker — Wed, 19 Oct 2011 18:45:17 GMT

I agree that binding out clauses are virtually unenforceable, having to be limited in time, area and scope, but that is more relevant surely to the usual case of an assistant leaving and either setting up in practice by him/herslef or joining a rival clinic. Here the situation is very different - he is selling you a business and expecting you to pay good money for goodwill. If you do not play hardball now, and have legal assurances built into the the contract of sale, you risk being played for a fool in three years time. This guy wants to sell up and retire, the best cards are all in your hand, but you must be prepared to walk away if you are not satisfied with the deal on offer, which of course might damage the current working relationship! But you have your own long term future to consider

Chris B

Re: Binding Out Clause

Eamon McAllister — Wed, 19 Oct 2011 18:42:29 GMT

That 3 year lease sounds much too short for my liking. Has the subject of rent review been mentioned? How old is he? Is he retiring? Personally I would prefer to buy the freehold of a practice property but if not possible in your case then ask for a five year lease with rent review every 5 years. Bind him out for 5 years and 25 miles and insist on an option to purchase / first refusal if he decides to sell the freehold and that will test his resolve.

Re: Binding Out Clause

Rob Davis — Wed, 19 Oct 2011 18:33:39 GMT

My understanding is that binding out clauses such as this are very hard to legally enforce, and I suspect that your solicitor is right, that a shorter period and smaller area would be more likely to be enforcible. I would be trying to increase the duration for the property lease. If the worst came to the worst you could be left without a premises in three years time - it will pass very quickly!