The issue from the q

No category Today 19:32

The issue from the question is whether the

restraint of trade is valid and enforceable.
A restrain of trade is a contract that prohibit
an individual from carrying on his trade or
occupation freely and without interference
from the other party. A restrain of trade in
employment contracts is the one that
states that in the event of termination of
employment, the employee is restricted in
the work the employee can perform for a
specific period of time and within a certain
geographic area. In common law such
restrain are considered void but it can may
be valid on some grounds. Section 37 of the
employement act states that where a
contract of employment of this Act,
provides for conditions of employment less
favourable to the employee than the
conditions of employment prescribed in
this Act the contract shall be null and void
to the extent that is so provides.

The first element of a restrain of trade to be

valid is when it is used to protect the sale of
goodwill. Purchasing a good will can
prohibit the seller from competing on the
same business as of the buyer to respect
the business sold. It is valid provided that it
is reasonable. This element is evident from
the case of Equinox Investment (Pty) v
Lepopo(pty) and Others. From the case the
restrain restrict wholesaling of alcohol
beverages and soft drinks in one district
only for a period of 5 years. The court held
that this was no valid reason to hold that a
buyer of business should not restrain the
seller of the business from competing with
the business he purchased for a reasonable
time period to protect the Investment hence
the 2nd respondent was restricted by the
court from wholesailing alcohol beverages
and soft drinks to the applicant's customers
untill 17 June 2002.

The second element is that the restrain

must be reasonable both in time and place.
A restrain for one year may be valid but a
perpetual restrain is invalid. Moreover a
restraint to not compete in the same town
or city may be valid while a restrain to not
compete anywhere in the world would be
invalid. In the case of if Sadan & Another v
workforce staffing (Pty) LTD, the was a
restraint that prevented the appellant from
taking up employment with the
respondent's competitors anywhere in
South Africa for a period of 2 years. The
court held that restraint to be unreasonable
because 2 years was an inordinately long
time for the apallent and reduced the
restrain to a period of one year.
Lastly the restrain must reasonably be in
the interest of both parties and also in the
public interest. If a restrain is harmful to the
seller or the public it becomes invalid..on
the case of Magna Allows and Research v
Ellis, E was employed by Magna as a
commission agent. The contrat of
employment contained a clause prohibiting
E from doing any business that is in
competition with the company for a period
of 2 years after termination of employment.
After leaving the company E entered into
breach of the restraint clause when by
working for a competing company. E
subsequently claimed outstanding
commission and Magna counterclaimed
for damages on the grounds that E is in
breach of the restraint clause. It was held
that the clause was unenforceable only if it
is against public policy and onus rest on
the party bound by the restrain to prove it is
against public policy. E failed in providing
that is it against public policy.

When we relate all this cases to the present

case in the question the restraint clause
was unenforceable and invalid as it stated
that clever must not work for a period of 6
months anywhere in the world, hence it is
not enforceable because it is against the
interest of clever and the public. For it to be
valid the employee was to be restricted to
work within a specific geographic location
not the rest of the world.