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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


Solus Agreement

Where a person agreed to restrict their mode of trade e.g. only accepting orders from one company.

Cleveland Petroleum v Dartsone


Exclusive service agreements

(George Michael) Panayiotou v Sony Music Intl