Business Law Case Study

a)

Nordenfelt established the general principle of ‘public interest’ that allows a person to continue their trade freely, making any restrictive covenants void. However, this rule can be upheld if two conditions are complied with: a legitimate interest, and reasonableness. Utilising the principle, the validity of the clause needs to be identified to advise both parties. In addition, if the clause is rendered void using the principle,severance could make it valid and enforceable.

A legitimate interest is ‘the nature of trade connection or in nature of trade secrets’. This was affirmed in Foster as the art of glass blowing was a trade secret yet in Morris , expertise and skills gained during employment were not trade secrets. Skilton , identified the customer base to be a trade connection that could be protected by a restrictive covenant.

WE are trying to prevent Des from passing on confidential information about clients to GE because like Skilton , Des would have been the face of the company and would have gained good customer connections. Thus, this interest can be protected.

The clause

MacKenna J identified three essential conditions to question if the terms were consistent to a contract of service. Addressing these conditions, substitution clauses removes the personal element and thus would be inconsistent with a contract of service. In addition, Tanton a personal service was an irreducible minimum which substitution clauses removed, taking a contractual approach. However, these decisions are criticized as it gives employers the ability in ‘avoiding legal responsibilities’ and how employers enter clauses to avoid liabilities. In addition, Pitt argues that if the question had been reversed; the courts would have found nothing inconsistent a contract of service and the right to delegate was