What is a Restraint of Trade Agreement?

Restraint of trade agreements are agreements imposed on an individual or a business. For example, such an agreement can be entered into between an employer to restrict or prevent an employee moving to a competitor after they leave or restricting their activities when they leave the business. They are also known by various permutations such as ‘non-solicitation’ agreements, ‘non-poaching’ agreements or non-compete agreements

Restraint of trade agreements are also commonly found in sale and purchase agreements (SPAs) to limit the activities of a seller or buyer to act in competition with the business sold or bought after completion. For instance, the buyer may wish to prevent the seller entering the same type of business in the same geographical location for a certain period.

However, the anti-competition laws seek to protect commercial freedoms and the free flow of trade by ensuring that the public and traders are free to select with whom they wish to enter a contract or do business -without restriction by other business organisations. For this reason, any clauses which seek to onerously restrain the trade or the ‘right to earn’ of another business, trader or individual will be deemed unlawful and the agreement may be voidable or void altogether.

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The courts will only allow a restraint of trade clause to stand if it is reasonable and in the public interest; and extends no further than necessary to protect the legitimate buyer’s or seller’s business interests.

How can Hillary Cooper Law facilitate your watertight Restraint of Trade Agreement?

Getting a Restraint of Trade agreement right is a fine balancing exercise often compared with walking a tight rope! Our team of legal expert apply out-of-box-thinking that facilitates the perfect balance in drafting these specialist and complex genre of contracts. We will advise you on all aspects of current law regarding restrictive trade agreement law, ensure we fully capture your brief and then draft the watertight document you need.