8 abril 2021
Individuals should be able to use their skills without inappropriate restrictions and companies should be free to compete with other companies. However, the limitation of trade clauses is not unusual in trade agreements. This blog discusses the general principles of trade restriction and examines the different types of restrictions on trade clauses that you may encounter in your business transactions. If these criteria are not met, the trade clause is null and final. If these criteria are met, the clause will generally be upheld in court. But what exactly does each of these criteria mean? The extent of the deduction must not be greater than what is reasonably necessary to protect the legitimate business interests of the employer. If the interest of the party who wanted to be retained weighs more than the protected interest, the deference is inappropriate and therefore unenforceable. Restriction clauses have generally been considered legally unenforceable. However, they can be maintained if the employer is able to demonstrate that the restriction clause is appropriate. Three of the main features that must apply to the validity of the retention clauses are: The exploitation of cascading retention clauses has been tested in OAMPS Insurance Brokers Ltd against Hanna  NSWCA 781.
Renowned labour law author Norman Selwyn states: “There are four legitimate interests for which the employer is entitled to limited protection: (a) trade secrets and confidential information; b) existing customers and links; c) work for competitors and (d) the temptation of existing workers.”  Cases in which the courts have recognized that the employer has a legitimate interest in a restriction are: Some factors that must be considered in determining whether a limitation of the trade clause is applicable include: an employment contract often involves a limitation of the trade clause in order to protect the employer`s interests after an employee has left his company. These clauses are most often found in executive and professional contracts, as well as in sales contracts. The corresponding limitation of the trade clause was as follows: in Basson/Chilwan e.a., 1993 (3) SA 742 (A), the Tribunal identified five questions to be asked when considering the appropriateness of a restriction of the trade agreement. After the termination of the employment relationship, a worker cannot confront a competitor of a company for the duration of the contract: “For a period of three months from the date on which the worker`s employment ceases to be employed by the employer (for any reason), the worker cannot in any way occur, directly or indirectly, in any capacity: in most cases, when a restriction of trade between the parties is appropriate. the courts will try to maintain them.