Restraint of Trade

Question 1

Restraint of trade clauses were prima facie void at common law, but they may be deemed valid if three conditions are met:

?

Which case established the Rule:

?

Answer 1

Restraint of trade clauses were prima facie void at common law, but they may be deemed valid if three conditions are met:

• the terms seek to protect a legitimate interest
• the terms are reasonable in scope from the viewpoint of the parties involved
• the terms are reasonable in scope from the viewpoint of public policy.

Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd

Question 2

What needs to be shown to make a trade restraint enforcable ?

Answer 2

(1) legitimate interest to
protect;
(2) the clause is reasonable between the parties as to subject matter,
area and duration;
and
(3) that the clause is not injurious to the public
(see Herbert Morris Limited v Saxelby (1916))