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Private Law I > Week Eight > Flashcards

Week Eight Flashcards

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1
Q

What is a restrictive covenant?

A

A contractual term restricting the activities of a former employee or seller of a business.

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2
Q

What is restraint of trade?

A

Limits to ensure fair competition and protection of business interests.

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3
Q

What balance must be ensured in restrictive covenants?

A

Ensuring the covenant is fair between public interest and individual rights.

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4
Q

What is an example of an activity restriction in a restrictive covenant?

A

“You may not practice as a solicitor.”

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5
Q

What is an example of a geographical limit in a restrictive covenant?

A

“You may not practice as a solicitor within 20 miles.”

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6
Q

What is an example of a time limit in a restrictive covenant?

A

“You may not practice as a solicitor within 20 miles within the next five years.”

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7
Q

Are restrictive covenants initially enforceable?

A

No, restrictive covenants are prima facie void and unenforceable.

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8
Q

What case establishes exceptions for restrictive covenants?

A

Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535.

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9
Q

What are the three requirements for a restrictive covenant to be justified according to the Nordenfelt case?

A

Is the covenant necessary to protect legitimate interests?

Is it reasonable between the parties?

Is it in the public interest?

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10
Q

What considerations are important for the reasonableness and adequacy of a restrictive covenant?

A

Nature of restriction (activity, geographical extent, duration)

Employment level (junior or senior)

Bargaining position

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11
Q

What case states that enforceability is independent of whether a party willingly signed a covenant?

A

Sundolitt v Addison [2017] CSIH 15.

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12
Q

What are the ground rules for enforcing a restrictive covenant according to Sundolitt v Addison?

A

Valid incorporation of the term.

Imposition of restriction by one party on another.

Justification for enforcement of the restriction.

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13
Q

What case supports upholding restrictive covenants for protecting property rights in the sale of a business?

A

Bridge v Deacons [1984] 2 WLR 837.

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14
Q

What case requires different considerations for restraints on earning a livelihood?

A

Herbert Morris v Saxelby [1916] AC 688.

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15
Q

What are legitimate interests that restrictive covenants aim to protect?

A

Protecting confidential information, trade secrets, business methods.

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16
Q

What is an example case involving a 2-year worldwide restriction?

A

Bluebell Apparel Ltd v Dickinson 1978 SC 16.

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17
Q

What is an example case involving a 2-year 1-mile radius restriction?

A

Scottish Farmers Dairy Co v McGhee.

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18
Q

What case introduced the ‘blue pencil test’ for enforceability?

A

Tillman v Egon Zehnder Ltd [2019] UKSC 32.

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19
Q

What was the restriction in Stewart v Stewart?

A

Photography business restriction within 20 miles of Elgin.

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20
Q

What is the discussion point for Stewart v Stewart?

A

Reasonability to protect business.

21
Q

What was the restriction in Dallas McMillan & Sinclair v Simpson?

A

Partnership agreement, 20-mile restriction for 5 years.

22
Q

What is the discussion point for Dallas McMillan & Sinclair v Simpson?

A

Appropriateness of restriction

23
Q

What was the restriction in Prosoft Resources v Griffiths?

A

Employment restriction involving confidential information.

24
Q

What was the court decision in Prosoft Resources v Griffiths?

A

Refusal to enforce interdict.

25
Q

What is the discussion point for Prosoft Resources v Griffiths?

A

Court’s reasoning for decision.

26
Q

What is the focus of liquidated damages and penalty clauses?

A

Limits on parties regarding stating the amount of damages in a contract for breaches.

27
Q

What are some examples of liquidated damages and penalty clauses?

A

Delay in delivery by a manufacturer incurs a fixed daily fee.

Late payment allows contract rescission and interest on overdue amounts.

28
Q

What are the purposes of liquidated damages and penalty clauses?

A

To simplify damage recovery without proving actual damage.

Avoid risk of under-compensation due to rules of remoteness.

Assurance for the promisee regarding promise fulfillment.

29
Q

What do liquidated damages clauses specify?

A

Monetary compensation for contract breaches.

30
Q

Are liquidated damages clauses enforceable

A

Yes, they are enforceable.

31
Q

How do penalty clauses differ from liquidated damages clauses?

A

Penalty clauses include a punitive element.

32
Q

Are penalty clauses enforceable?

A

No, they are unenforceable (Scots Law: could be modified to remove the penalty element).

33
Q

What is the aim of compensation in the measure of damages?

A

To restore the injured party to pre-breach status (A/B Karlshamns Oljefabriker v Monarch Steamship Co Ltd).

34
Q

Are damages compensatory or punitive?

A

Compensatory, not punitive.

35
Q

What case involved a penalty for late delivery?

A

Clydebank Engineering & Shipbuilding Co Ltd v Castaneda.

36
Q

How is the nature of a clause assessed?

A

By examining the clause’s nature at contract inception.

37
Q

What case differentiated between punishment and genuine damage estimate?

A

Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd.

38
Q

What factors are considered in this differentiation?

A

Extravagance, payment requirements, and breach consequences.

39
Q

How would you evaluate if a £50,000 fee for painting a shed the wrong color is a penalty?

A

By assessing if the fee is punitive or a genuine pre-estimate of loss.

40
Q

What cases are key in the current approach to liquidated damages?

A

Cavendish Square Holding v Talal El Makdessi; ParkingEye Ltd v Beavis.

41
Q

What considerations are made in the current approach?

A

Legitimate interests beyond compensation.

Whether the amount is exorbitant.

Distinguishing between primary (performance) and secondary (breach) obligations.

42
Q

What was the issue in Cavendish?

A

Non-competition clause with payment forfeiture.

43
Q

What considerations were made in Cavendish?

A

Legitimate interest and proportionality.

44
Q

What was the issue in Parking Eye?

A

Fee for overstaying in a car park

45
Q

What considerations were made in Parking Eye?

A

Legitimate interest and proportionality.

46
Q

What was the issue in Indigo Park?

A

Charge for not displaying a valid ticket.

47
Q

What considerations were made in Indigo Park?

A

Enforcement costs and proportionality.

48
Q

How would you re-evaluate the example with Andy and Sara to assess penalty considerations?

A

By considering if the £50,000 fee is punitive or a genuine pre-estimate of loss, and if it serves a legitimate interest and is proportionate.

Private Law I (9 decks)

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