Restraint of Trade

Question 1

Restraint of Trade Contract

Answer 1

One which restricts the liberty of a person to carry out their trade in any manner they chose.

Question 2

Courts general view on Restrain of trade:

Answer 2

Void unless justified as being reasonable.

Question 3

Test of reasonableness for restraint of trade:

Answer 3

Restraint must be reasonable

• As between parties
• In the public interest

Nordenfeldt v Maxim Nordenfeldt

Question 4

To be held reasonable, the restraint must also:

Answer 4

• Protect a legitimate proprietary interest.

- Protect no more than the interest in question.

Question 5

Main groups of restrain of trade:

Answer 5

• Restraints accepted by employees.
• Restraints in a contract of sale of a business.
• Solus agreements
• Exclusive service agreements

Question 6

Restraints accepted by employees:

Answer 6

Employee agrees that upon leaving, they will not compete with their former employer.

Question 7

Matters which an employer can protect by way of reasonable restraint:

Answer 7

• Trade secrets
• Business connections

Eastham v Newcastle Utd`

Question 8

Restraints in a contract of sale of a business.

Answer 8

Vendor promises not to compete with purchaser.

Question 9

When is a Restraints in a contract of sale of a business deemed as valid:

Answer 9

Only valid if connected with the proprietary interest that has been bought e.g. goodwill.

British Reinforced concrete v Schelff

Question 10

Solus Agreement

Answer 10

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

Cleveland Petroleum v Dartsone

Question 11

Exclusive service agreements

Answer 11

(George Michael) Panayiotou v Sony Music Intl