WK 8 - Restrictive covenants

Question 1

What might restrictive covenants regard? Give examples. (3)

Answer 1

• What you cannot do: You may not practice as a solicitor.
• Where you cannot do it: …within 20 miles.
• Time ~ length of restriction: …within the next five years

Question 2

Restrictive covenants are (void/voidable)

Answer 2

Prima facie void and unenforceable

Question 3

Explain Nordenfelt’s three requirements

Answer 3

Is the covenant…

(1) Necessary to protect legitimate interests?

(2) Reasonable between the parties

(3) In public interest

Question 4

What must be considered for reasonableness and adequacy?

Answer 4

(1) Nature of restriction
[geographical, duration, activity]

(2) Nature of employment
[junior or senior]

(3) Bargaining position
‘The fact that, on the face of it, a party has willingly signed…has nothing to do with the question as to whether the restriction is or is not enforceable as a matter of public policy.’ Sundolitt v Addison [2017] CSIH 15

Question 5

Explain the ground rules from Sundolitt v Addison (2017)

Answer 5

• Has the term been validly
  incorporated?
• Does the term impose a restriction on one party over another party who seeks to enforce the restriction?
• Should the restriction be enforced?

Question 6

Explain blue pencil test

Answer 6

○ Can the clause be removed without modifying what remains

Like topple tower !

Question 7

Two part severability test

Answer 7

Can the clause be removed without modifying what remains?

Does removal alter the contract so that it is no longer the sort of contract entered into by the parties?