1. INTRODUCTION
1.1 The purpose of this paper is to provide a practical guide to drafting and enforcing restraints. However, we appreciate that a number of the people reading this paper are looking for something that they can copy and paste into submissions. For those of you who fall into this category, please see sections 2 and 3 below.
1.2 For the remainder of you, rather than delving into case law and analysing the various inconsistent Court decisions that exist in this area of law, we have attempted to set out a basic guide as to what you should consider when drafting restraint of trade clauses and what you should prepare if you are seeking to enforce a restraint of trade clause.
2. RELEVANT LEGAL PRINCIPLES – RESTRAINTS OF TRADE GENERALLY 2.1 The principles relevant to the validity of restraint of trade clauses are now well settled. At common law, a restraint of trade is contrary to public policy and void, unless it can be shown that the restraint is, in the circumstances of the particular case, reasonable.[1]
2.2 The onus at common law of showing that the restraint goes no further than is reasonably necessary to protect the interests of the person in whose favour the restraint operates lies on the party seeking to support the restraint as reasonable.[2]
2.3 The validity and reasonableness of the restraint is to be determined as at the time it is entered.[3]
