Credico Marketing Limited & Anor. v Benjamin Gregory Lambert & Anor.

This case is about two different kinds of restraint in the same agreement. One stopped a marketing company from working for others while the agreement was still running. The other tried to stop similar work for six months after the agreement ended within a 10-mile radius.

The Court of Appeal split the result. It upheld the during-contract exclusivity clause, but struck down the post-termination non-compete. That makes the case a useful guide for businesses that rely on network operators, franchise-style structures or independent contractor channels.

The judgment is also a reminder that courts look closely at the real commercial relationship. Labels in the contract mattered less than what Credico actually provided, what S5 actually did, and what interest Credico was really trying to protect at each stage.

Credico organised direct marketing campaigns for clients but did not itself carry out the sales activity. Instead, it used local marketing companies, known as MCs, which recruited independent sales advisers. Those advisers sold through door-to-door work and pop-up booths.

Mr Lambert had worked his way up from ISA to owner of S5 Marketing Ltd. S5 operated under Credico’s standard form Trading Agreement. The agreement required S5 to operate solely as part of Credico’s network, but it did not guarantee any minimum work and could be terminated by either side on 14 days’ notice.

The agreement also contained two restrictive covenants. Clause 21.1 applied while the agreement was in force. Clause 21.2 applied for six months after termination within a 10-mile radius of the MC’s base. Mr Lambert also signed a guarantee making those restrictions binding on him personally.

In late 2020, S5’s ISAs worked on campaigns for Novibet and then for Energy Sales Marketing, which was a rival of Credico. Mr Lambert said he arranged this because Credico was not providing appropriate work and he needed to keep income flowing for his team before Christmas.

Credico treated the third-party work as a breach. It demanded undertakings, then sought injunctive relief. The High Court held both covenants enforceable after a speedy trial. Mr Lambert and S5 appealed, and the Court of Appeal had to decide whether both restraints could really stand.

The court spent time looking at what Credico actually did for MCs. That mattered because enforceability depended on the real commercial relationship, not just the wording of the contract.

Credico’s main role was to find clients and secure direct marketing campaigns. The judge had found that, in practice, an MC could not realistically negotiate those campaigns directly with the clients. Credico was the middleman that gave MCs access to work at scale.

Credico also provided support. It supplied campaign briefs and materials. It arranged training, although much of that was delivered by client representatives. It also provided back-office services through its Hub team, including banking and accounting arrangements, insurance, commission processing and office-related payments.

The trial judge had found those services were of very considerable value. They freed MCs from administrative work and let them focus on recruiting ISAs and increasing sales. The Court of Appeal accepted that this support was a real part of the commercial bargain.

But there was another side to the relationship. The agreement was drafted to keep MC owners outside employee status and to present them as running separate businesses. Credico also used a standard form contract. The parties were not treated as negotiating on equal terms. Those features increased the need for careful scrutiny.

The appeal was not really about whether S5’s team had done outside work. Much of that was accepted. The central question was whether the restraints were valid under the restraint of trade doctrine.

The court had to ask whether Credico had a legitimate interest capable of justifying each restriction, and whether the wording went no further than reasonably necessary. The answer could differ between a restraint operating during the contract and one operating after termination.

The court also looked at the surrounding features of the agreement. These included the lack of guaranteed work, the short notice termination right, the standard form nature of the contract and the parties’ bargaining positions. Those factors did not decide the case on their own, but they formed part of the overall assessment.

The Court of Appeal held that clause 21.1, the during-contract restriction, was valid and enforceable. It accepted that Credico was entitled to demand exclusivity as the quid pro quo for providing campaigns and support to S5. While Credico was investing in an MC, it could reasonably expect the exclusive benefit of that MC workforce.

The court also accepted the logic of binding the owner personally. Otherwise, the owner could undermine the restraint by setting up a new MC under a different name while the agreement was still running.

But the court reached the opposite conclusion on clause 21.2, the six-month post-termination covenant. Once the Trading Agreement had ended, Credico could no longer justify the restriction simply by saying it had been providing campaigns and support during the relationship. The court asked a different question: what continuing interest needed protection after termination?

On the findings below, Credico did not have the usual protectable interests often relied on in these cases. The judge had found there was no relevant goodwill, no customer connection of the franchise type, and no confidential information or special know-how that would make it unjust for S5 to compete after leaving.

The Court of Appeal said that general investment in building up an MC was not enough on its own to justify a post-termination non-compete. Without a distinct protectable interest, the clause looked like a restriction on competition for its own sake, and that is not enough.

Credico relied on franchise authorities, including ChipsAway and Prontaprint. The Court of Appeal said those cases did not really solve this one.

In a typical franchise, goodwill is built up in the franchisor’s name and branding in a particular territory. A former franchisee may know the local customer base and be able to exploit that goodwill after the relationship ends. That gives the franchisor a recognised interest to protect.

The court said Credico’s model was different. Credico did not have goodwill of that nature. It had no customers of its own in the relevant sense, and the connection with Credico did not assist an ISA in selling products or an MC in recruiting new ISAs. In fact, Credico discouraged MCs from emphasising the connection because it wanted them to appear independent.

That meant the franchise analogy only went so far. The fact that Credico had invested time and support into S5 did not automatically create the kind of post-termination interest that franchise cases protect.

Several features of the agreement and relationship mattered to the court’s reasoning.

First, the Trading Agreement did not oblige Credico to provide any work at all. That did not defeat the during-contract clause, but it weakened any attempt to treat the arrangement as a straightforward exclusive agency model.

Second, the agreement could be terminated on 14 days’ notice. A short and easily terminable arrangement may attract closer scrutiny when it also contains broad restraints.

Third, the contract was a standard form and the parties were not on equal bargaining terms. The court repeated that judicial deference to the parties’ own commercial judgment carries less weight where bargaining power is unequal.

Fourth, the trial judge had found that the training and support were either campaign-specific or of a kind that could be obtained elsewhere without undue difficulty. That finding was important because it undercut any argument that S5 had acquired special know-how justifying a post-termination ban.

Fifth, the 10-mile radius did not obviously map onto any protectable interest of the kind seen in franchise territory cases. The court noted concerns that the clause looked somewhat arbitrary in this business model.

One important part of the case is easy to miss. Even though the Court of Appeal held the post-termination covenant invalid, it did not discharge the injunction.

That was because Mr Lambert and S5 had signed separate undertakings after Credico threatened proceedings. The trial judge held those undertakings formed a binding contract and were enforceable. That part of the decision was not appealed.

So the appeal succeeded on the validity of clause 21.2, but not on the practical point of whether injunctive relief should remain in place. The injunction could still stand because it was supported by the undertakings, not only by the covenant in the Trading Agreement.

For businesses, this is a reminder that conduct after a dispute starts can become just as important as the original contract. A signed undertaking may create its own enforceable obligations.

This decision is most useful for businesses that use independent operators, local partners or sales channels under standard form agreements. It shows that the court will not treat every restraint as one package.

If you are trying to protect a live network, exclusivity may be easier to justify where you are actively supplying campaigns, systems, support or infrastructure and want the exclusive benefit of the operator’s workforce while that support continues.

If you want protection after termination, the court will usually ask for something more specific. The judgment points towards recognised interests such as goodwill, customer connection, confidential information or special know-how. A general wish to stop a former operator competing is not enough.

The case also shows the limits of broad comparisons with franchise law. If your model does not involve the same kind of territorial goodwill or customer relationships, a franchise precedent may not carry the same weight.

Finally, where your agreement is a standard form, offers no guaranteed work and can be ended on short notice, expect the court to look closely at whether the restraint is genuinely tied to a protectable interest.

Business owners often read restraint clauses as if they all stand or fall together. This case shows that is not how the court approached the issue.

A clause that keeps an operator exclusive during the contract may be justified by the support, work and infrastructure being provided at that time. A clause that stops the operator competing after termination needs a separate continuing interest to protect.

That is why the same agreement produced two different answers. The live exclusivity clause survived. The six-month post-termination non-compete did not.