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Commercial Business law – Restraint of trade employment

A restraint of trade is contrary to public policy and void, unless on the facts of the particular case the restriction is reasonable having regard to, first, the interests of the parties and, second, the interests of the public, so that while affording adequate protection to the former employer, it is not injurious to the public.

If the restraint is not reasonable by reference to the interests of the parties and the public, it is contrary to public policy and void. In modern law “void” is equated with unenforceable. This test reconciles two conflicting policies, first that a person should be free to use his/her skill and experience to the best advantage, and secondly, that covenants should be observed and enforced.

A restraint of trade is unreasonable if it is greater than is needed to give adequate protection to the person for whose benefit the restraint is created.

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