Discussion on Restraints of Trade
Law of Contract | A discussion on the Restraint of Trade | |
Introduction
Business owners in an attempt to protect the goodwill of their business will often include “Restraint of trade” provision in employment agreements, sale of business agreements etc. Thus, an agreement, which someone is restricted in his freedom to carry on his trade, profession, business or other economic activity, is generally called an agreement in restraint of trade.
Having said that, this paper is directed towards a brief and critical discussion on the concept of restraint of trade in which parties may find themselves. It is based on a given scenario whereby the facts, the legal issues, legal principles, and application of the law to the facts would be discussed in the form of advice to Y jeopardise
Facts
The facts to the case are as follows:
X an estate agents company, sought to restrain its former employee Y (who had worked very successfully for X for approximately 3years as an estate agent) from doing business on her own as an estate agent in the city of Windhoek. The restraint clause was in the form of a written contract of employment.
The restraint contract prevented Y from being involved in any way whatsoever in an estate agency or any business which was the same or similar to X’s estate agents company. Y was limited as to geographic area within 65 kilometres from Windhoek General Post Office, which also includes six other municipalities for a period of 2 years following the termination of Y’S employment as an employee.
Legal Issues
* Is there a legitimate interest of the employer (X) that deserves protection at the termination of the employment agreement by Y? * Whether the restraint is reasonable or not? * Whether the use of Y’s general skills and knowledge would be in breach of the restraint of trade agreement, which Y knowingly signed? * Is it legal to have restrain clause in an employment contract? * What is the longest period that it
Introduction
Business owners in an attempt to protect the goodwill of their business will often include “Restraint of trade” provision in employment agreements, sale of business agreements etc. Thus, an agreement, which someone is restricted in his freedom to carry on his trade, profession, business or other economic activity, is generally called an agreement in restraint of trade.
Having said that, this paper is directed towards a brief and critical discussion on the concept of restraint of trade in which parties may find themselves. It is based on a given scenario whereby the facts, the legal issues, legal principles, and application of the law to the facts would be discussed in the form of advice to Y jeopardise
Facts
The facts to the case are as follows:
X an estate agents company, sought to restrain its former employee Y (who had worked very successfully for X for approximately 3years as an estate agent) from doing business on her own as an estate agent in the city of Windhoek. The restraint clause was in the form of a written contract of employment.
The restraint contract prevented Y from being involved in any way whatsoever in an estate agency or any business which was the same or similar to X’s estate agents company. Y was limited as to geographic area within 65 kilometres from Windhoek General Post Office, which also includes six other municipalities for a period of 2 years following the termination of Y’S employment as an employee.
Legal Issues
* Is there a legitimate interest of the employer (X) that deserves protection at the termination of the employment agreement by Y? * Whether the restraint is reasonable or not? * Whether the use of Y’s general skills and knowledge would be in breach of the restraint of trade agreement, which Y knowingly signed? * Is it legal to have restrain clause in an employment contract? * What is the longest period that it