Restrictive Covenants Essay

879 Words 4 Pages
Restrictive Covenants

In the situation described in this problem, a restrictive covenant would be the best way to protect the company's interests. Although the implied terms of employee confidentiality regarding company information would be valid in this case, they wouldn't stop an employee working with rivals. All doubt should be removed by the inclusion of a clause in which the employee undertakes not to carry on a particular trade or profession for a period after the termination of the contract. It would permit the company to seek a interim interdict in court against Dr MGleam and Ms Wilkes preventing them from breaching the covenant.

Restrictive covenants are common in many contracts
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The covenant can legitimately protect trade secrets or trade connections, but the House of Lords has held that it is not permissible for the employee to protect himself from the competition of his employee after his service has terminated (Fitch v. Dewes). Note that many cases on covenants are English; the law is similar in this subject however. In any case (no pun intended) the English cases are persuasive.

There are no hard and fast rules governing the duration of the restraint; in the past courts have enforced worldwide covenants (limited in time) as is the case in Bluebell Apparel v. Dickson. Courts have also set aside UK wide covenants for smaller businesses too (Dumbarton Steamboat Co. v. Macfarlane)

The multi-national nature of the company leads one to believe that the a worldwide covenant would be possible, however significant sections of the globe (Canada, South America, Africa) are not operated in by the company. Remembering that courts will interpret 'reasonable' more narrowly for employer-employee covenants, it would be wise not to try for a world-wide restraint. This simply means that the covenant would specify that the covenantor would not work within the districts where the company has markets when the contract ends. As courts do not alter covenants

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