Enforcing restraint of trade australia

Is the restraint of trade clause reasonable? What is restraint of trade? Can employers use a restraint clause? For example, it may be difficult to enforce a restraint of trade in a niche industry because you could be restricting ex-employees from working in their profession. A well-drafted employment agreement typically includes a cascading restraint clause.

This is assessed on a case by case basis. As Mr Stephens was nearing the end of his career and it was unlikely that Mr Stephens would work anywhere other than Australia or that Network Ten would consent to him undertaking some other trade , business or profession, Brereton J rationalised that granting an injunction to enforce the restraint on its terms would “. Mr Stephens and reduce him to the alternative of working for Ten or being idle, a result that equity will not countenance. A restraint clause starts out as void (ie bad). As opposed to various other jurisdictions, such as the United Kingdom, in South Africa, restraints of trade are generally enforceable unless the restraint is found to be unreasonable and contrary to public policy.

Here’s how restraint of trade clauses apply when selling a business. The unreasonable restraint can then be severed and the employer can enforce the remaining restraints. The contract in which the restraint was included had been exec. In a very interesting case in Western Australia ’s Supreme Court, a US company sought to enforce by interlocutory injunction a restraint of trade against a former employee who had accepted employment with a rival in Western Australia.

Enforcing restraint of trade australia

The first question to be determined therefore was whether Austal had demonstrated a serious question to be tried in that the restraint in clause 8. Restraint of Trade : A Note for Employers. Mr Clay’s contract could be found to be. However, please note that the specific circumstances of your employment will determine whether a restraint of trade is enforceable or not. If you are facing a restraint of trade dispute, you should seek independent legal advice.

Two recent decisions of the NSW Supreme Court have shed further light on the court’s approach to enforcing post-employment restraints. Broadly speaking, exclusive dealing occurs when one person trading with another imposes some restrictions on the other’s freedom to choose with whom, in what, or where they deal. Exclusive dealing is against the law only when it substantially lessens competition. These clauses will vary depending on the nature of the firm’s business, but can for example operate to prevent a departing partner from setting up in business nearby for a certain time.

The intention of the parties may also be relevant when assessing. M, which provides that the common law relating to restraint of trade shall not be interfered with where the law is capable of operating concurrently with the Act. Importantly, the restraint of trade clause relied on was not contained in an employment agreement, but an agreement to sell his shareholding in the company. Justice McDonald found that the restraint afforded reasonable protection of the purchaser’s goodwill in the company that could be attributed to the shareholding. The general law considers restraint of trade clauses unenforceable unless the restraints are reasonable and necessary to protect the legitimate interest of the business.

The first hurdle for a business which is trying to enforce a restraint is the legitimacy of the interest that the business seeks to protect. Planet sought to enforce a restraint of trade clause against the first defendant, Ms Dunlop. Ms Dunlop entered into an independent contractor relationship with Planet to provide services as a personal trainer to Planet clients. An employer can only enforce a restraint of trade clause to the extent that it is reasonably necessary to protect their business interests. However, whether a clause is reasonably necessary will depend on the particular facts of the case, and in any dispute, it is best to seek professional legal advice.

However, we appreciate that a number of the people reading this paper are looking for something that they can copy and paste into submissions. The purpose of this paper is to provide a practical guide to drafting and enforcing restraints. Failing to properly draft a restraint of trade clause can render the clauses void and unenforceable.

Enforcement of a restraint will depend on its reasonableness and the general approach of the courts, in most states, is that if only one period of restraint is specifie and it is unreasonable, then the whole restraint provision will become ineffective.