Flashcards in Restraint of Trade Deck (11):
Restraint of Trade Contract
One which restricts the liberty of a person to carry out their trade in any manner they chose.
Courts general view on Restrain of trade:
Void unless justified as being reasonable.
Test of reasonableness for restraint of trade:
Restraint must be reasonable
- As between parties
- In the public interest
Nordenfeldt v Maxim Nordenfeldt
To be held reasonable, the restraint must also:
- Protect a legitimate proprietary interest.
- Protect no more than the interest in question.
Main groups of restrain of trade:
- Restraints accepted by employees.
- Restraints in a contract of sale of a business.
- Solus agreements
- Exclusive service agreements
Restraints accepted by employees:
Employee agrees that upon leaving, they will not compete with their former employer.
Matters which an employer can protect by way of reasonable restraint:
- Trade secrets
- Business connections
Eastham v Newcastle Utd`
Restraints in a contract of sale of a business.
Vendor promises not to compete with purchaser.
When is a Restraints in a contract of sale of a business deemed as valid:
Only valid if connected with the proprietary interest that has been bought e.g. goodwill.
British Reinforced concrete v Schelff
Where a person agreed to restrict their mode of trade e.g. only accepting orders from one company.
Cleveland Petroleum v Dartsone