Week 8: Specific Terms (Restrictive Covenants and Liquidated Damages)

Question 1

Which case judgement highlighted that while by in large Restrictive Covenants are prima facie void, there are special circumstances under which they are legally binding/.

Answer 1

Nordenflet v Maxim Nordenfelt Guns and Ammunition.

Question 1

What the three primary considerations when examining a restrictive covenant?

Answer 1

1. Nature of restriction
2. Nature of employment
3. Bargaining Position -

Question 2

What is the two-prong test to evaluate the severity of a restrictive covenant?

Answer 2

1. Blue pencil test
2. Does it fundamentally change the nature of the contract?

Question 3

Which case highlights that if a restrictive covenant is not in the legitimate business interests of the party making the contract - it cannot be enforced.

Answer 3

Dallas McMillan & Sinclair v Simpson