Published on April 7th, 2021 | by Newt Rayburn0
Agreement Of Restraint Of Trade
If these criteria are not met, the trade clause is null and final. If these criteria are met, the clause will generally be upheld in court. But what exactly does each of these criteria mean? Section 27 was drafted in a manner that provides absolute protection against any type of trade restriction, reasonable or not. The rigidity of language in this section does not leave much room for a broader interpretation and, as such, is at the heart of the debate on the validity of this provision. The above section has been regularly discussed by various courts in petitions to enforce similar reserve clauses. In order to understand how the courts have managed the application of these clauses, we have reviewed subsequent court decisions. There are two exceptions to Section 28, as mentioned in the legislation. With respect to whether the restriction was appropriate with respect to the interests of the parties and the public, the court would generally consider factors such as the length of the limitation and the geographical scope of the clause in question. In the case of Mano Vikrant Singh/Cargill TSF Asia Pte Ltd (8), the Singapore Supreme Court found the clause in question to be inappropriate and therefore unenforceable for the following reasons. First, the term clause was longer than necessary. The non-competition agreement limited trade only for one year, while the clause covered a two-year period.
There was no compelling reason why the legitimate interest of the ownership business requires protection beyond the period for which it has already been protected under the non-competition agreement. Second, the clause has no geographical limit, while the restriction under the non-competition ban is limited to countries where the company has a real place of activity. Finally, the clause included employment and advice to any organization that competed for employees, customers, customers, market shares or resources and financial/merchandise transactions. It was not limited to the activities of the business and was therefore broader than necessary to preserve the defendant`s legitimate interest in ownership.