Restraint of trade doctrine in England, Scotland and South Africa : with specific reference to post-employment, sale of business and post-partnership restraints

Abstract

The restraint of trade doctrine in England, Scotland and South Africa: with specific reference to post -employment, sale of business and post partnership restraintsThe restraint of trade doctrine as understood here developed in English law, but it was transplanted to South Africa and Scotland. The two mixed legal systems closely followed English law. In Scotland a separate jurisprudence only recently developed in this area. In South Africa attempts have been made to distinguish the English doctrine, but it has remained fundamentally intact. That does not mean that the three systems are merely carbon copies of one another. Yet differences are subtle.An attempt is made to analyse the doctrine from broad principles although it is difficult. The doctrine has always worked in practice, but produces nice theoretical problems. It is submitted that the public policy value of freedom of work should be the most important tenet underlying the doctrine. Only clauses that offend against this fundamental principle should be investigated in terms of this doctrine. Only when the courts find that the interference with freedom of work cannot be justified should clauses be struck down.The classical restraints i.e. post -employment, sale of goodwill, and post -partnership restraints are discussed. These cases stand quite separate from most other restraints because they operate after termination of a work or production relationship, and because they have generated a vast corpus of cases.The reasonableness inter partes test and the direct impact of public interest is analysed. Most importantly, it is argued that the public policy restraint of trade doctrine operates on two levels. The question whether the restraint is no wider than the legitimate interests of the covenantee makes or breaks a case. But many other aspects are also considered in filling the vacuums left by the severe difficulties of applying law to facts in this area of public policy.The manner in which courts deal with restraints has a profound influence on the result of restraint of trade decisions. Here novel suggestions in South Africa have questioned old dogmas. The onus in restraint of trade cases, the consequences of restraints that are unacceptable, the point in time from which the restraint should be tested, and the severability issue are of pivotal importance. Finally, the question of remedies is addressed. Here the peculiarities of the Scots doctrine come to the fore. Restraints are often of short duration and the slow grind of court systems has to bow to practical necessity.