Restraints of Trade
Restraints of Trade
Our premier guide to understanding restraints of trade. It includes information on enforceability and what remedies are available for a breach.
Restraint of trade clauses may prohibit a former employee from competing with you in some
circumstances. Restraint of trade clauses that are unreasonable may be unenforceable.
An interim injunction is sought to enforce a restraint of trade clause; if granted, this prevents
the former employee from engaging in trade or being employed by a competitor for a specified
period.
Restraints of trade are prima facie unlawful because they restrict a person’s ability to participate
in commerce.
Restraint of trade clauses that are reasonable can be justified in law and upheld by the courts.
A clause may be upheld if the employer is able to establish that it is reasonably necessary for
the protection of some proprietary interest which the law recognises; provided that it is not
unreasonable from the point of view of the employee and that it is not in conflict with the public
interest.
The burden of proving the reasonableness of a clause rests upon the party seeking to enforce it.
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