What is restraint of trade clause? How to protect your business from restraint of trade? How to maximise the protection of a restraint of trade clause? If you’re using the standard form business contract in the relevant state, a restraint is usually contained in the general conditions, with the area and period to which that restraint will apply set out in the schedule, or on the first page.
The recent decision of the Supreme Court of.
It has long been established at common law that a term of a contract that is an unreasonable restraint of trade is, in the first instance, contrary to public policy and void ( Peters (WA) Ltd v. Most sale of business contracts include a restraint of trade clause. A ‘restraint of trade clause’ is designed to protect the goodwill of a business sold by the vendor to the purchaser. Typically, a restraint of trade clause will prohibit the vendor from carrying on a competing business (or engaging within a competing business ) within a certain geographical area or radius over a given time period. In a business context, they offer protection to a buyer who has acquired a business and prevent the seller from directly competing against the buyer.