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Restraint of Trade
Restraint of Trade Clauses or ‘Restrictive Covenants’

General principle:
Nordenfelt v Maxim Nordenfelt [1894] AC 535 (HL), 565 (Lord Macnaghten):

‘The public have an interest in every person’s carrying on his trade freely: so has the individual. All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy

. . . . ’

Esso v Harper’s Garage [1968] AC 269 (HL), 306 C-D (Lord Morris):

In these cases … there are two freedoms to be considered – one the freedom of trade and the other the freedom of contract; and to that I will now again venture to add that it is a mistake to think that public interest is only concerned with one; it is concerned with both.’

Classes of Legitimate Interest

(i) Special knowledge

Forster v Suggett (1918) 35 TLR 87 (Ch) *lexis only
Morris v Saxalby [1916] 1 AC 688 (HL)

(ii) Customer connections
Home Counties Dairies v Skilton [1970] 1 WLR 526 (CA) (facts below)*

Area; Duration; activities

(i) Area
Fitch v Dewes [1921] 2 AC 158 (HL),

Mason v Provident Clothing [1913] AC 724 (HL)
Home Counties Dairies v Skilton [1970] 1 WLR 526 (CA)

‘The employee expressly agrees not at any time during the period of one year after termination of his employment … either on his own account or as representative or agent of any person or company, to serve or sell milk or dairy produce to … any person who at any time during the last six months of his employment shall have been a customer of the employer and served by the employee in the course of his employment.’

See also Fellows v Fisher (below)

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