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Restraints of Trade (Part 2): Case Studies on Restraints of Trade
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Key Insights
Good drafting is not always enough. The episode discusses a case where post-employment restraints were well drafted but still fell down because of the business’s conduct. This highlights that restraint disputes are not assessed only by reading the clause. How the parties behaved, and whether the business comes to court with clean hands, can matter.
The commercial context can change the restraint analysis. A restraint in an employment context may be viewed differently from a restraint connected with a business sale. The episode considers how courts approach restraints where a former business owner competes after a sale transaction, including examples where the restraint did and did not prevent that conduct.
Case studies show why restraint advice needs to be practical. Restraint clauses are often drafted well before anyone needs to rely on them, but their effectiveness is tested when enforcement becomes necessary. Looking at how courts have dealt with real restraint disputes helps businesses and advisers understand what may matter if a restraint is later challenged.
Restraint clauses are only useful if they can be relied on when it matters.
In Part 2 of this Explain That series on restraints of trade, Andrew Henshaw is joined by Katherine Stewart to discuss recent cases showing how restraints are interpreted and enforced by the courts.
Following Part 1, which introduced the role of restraints in protecting business interests, this episode looks at how restraint disputes play out in practice, including why drafting is only one part of the analysis.
The discussion covers:
- how courts interpret and enforce restraints of trade;
- recent case studies involving restraint clauses;
- why well-drafted post-employment restraints can still fail;
- the significance of a business coming to court with “clean hands”;
- how the commercial context can affect restraint disputes;
- restraints involving former business owners after a sale transaction;
- examples where restraints did and did not prevent a former business owner from competing; and
- practical lessons for businesses and advisers dealing with restraint clauses.
A practical discussion for employers, employees, business owners and advisers who want to understand how restraint clauses are tested in real disputes.
For advice on restraint clauses, employment agreements, business sale restraints or restraint disputes, contact Velocity Legal.
This podcast in no way constitutes legal advice. It is general in nature and is the opinion of the author only. You should seek legal advice tailored to your individual circumstances before acting on anything related to this podcast.
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