Restraint of trade clauses are often found in employment
contracts and Australian businesses are increasingly choosing to
use restraint clauses in contracts between commercial entities.
When used in this form, however, they serve to restrict the freedom
of third parties (the employees), so certain criteria must be met
in order for the restraint to be valid.
In a recent case, ClarkeKann successfully represented a client
in a restraint of trade case before the Supreme Court that
illustrates the issue of validity.
In this particular case, our client had freely negotiated a
restraint clause as a contract term with another business entity.
Following the contractual agreement our client wanted to prevent
(or restrain) the other entity from employing its past and present
employees. ClarkeKann successfully sought an urgent interim
injunction against the other business entity at an interlocutory
hearing, and was then successful in maintaining the interim
injunction
