OCR A2 Contract Law Special Studies Paper - Restraint of Trade - 34 Marker (2)

This is for the 2013 paper only

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  • Created by: Majid
  • Created on: 02-01-13 16:30

Restraint of Trade - 34 Marker (2)

Unreasonable Employer/Employee:The courts have recognised the doctrine of ROT in employer/employee cases, where employee's promise not to set up a business on their account on leaving the employer's service or to enter employment into a rival firm (Source 1, L19-21). The leading case in this area is "Mason V Provident Clothing Industry". (Facts of case are in source 4, L6-8 and 12-15). It was held to be unreasonable due to unequal bargaing strengths being used and the courts also refused to sever. The lords have adopted a similar line of reasoning in the case of "Herbet Morris v Saxelby". Here an engineer and a draftsman who worked in London was restrained from working with or alone in the sale of pulley block etc for 7 years in the UK or Ireland. It was held to be unreasonable as the clause was too wide as he never had customer contact. The Court of Appeal (CofA) also confirmed this in the case of "Attwood v Lamont", where a tailor was restrained from working as a dressmaker and a haberdasher within a 10 mile radius of Kidderminster. In this case it was also held to be unreasonable as the clause was too wide and against public policy. Here the courts also refused to sever.

AO2: In all these cases they show judicial unity in their approach in dealing with ROT clauses. In "M v PCI", Lord Moulton stated in source 4 at lines 16-17 "that even if the covenant, as a whole, was too wide, the courts might enforce restrictions which it might consider reasonable". Lord Moulton also went onto say that the real sanction was the "expense and terror of litigation" (S4, L26) and that the covenant was "penal rather than protective" (S4, L29-30) and that they shouldn't rely on the courts to correct their mistakes and that they "should take the consequences" (S4, L31).

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