Restraint of trade CASES

In English law, a restraint of trade is a contractual term restricting an individual’s or business’s freedom to engage in trade or professional activities, enforceable only if reasonable and justifiable.

Definition and Principles

Restraints of trade clauses typically prevent individuals from competing, soliciting customers, or working within certain industries or geographic areas after leaving employment or selling a business. To be valid, they must protect legitimate interests and not excessively restrict trade.

Key Considerations

• Reasonableness: Duration, geographic scope, and nature of restriction.
• Legitimate Interests: Protection of trade secrets, confidential information, customer relationships, or goodwill.
• Public Interest: Courts consider the broader public impact of enforcement.

Practical Implications

Careful drafting ensures restraints are enforceable and proportional, balancing protection of legitimate business interests with individual freedom.