Q: Are restraints of trade even valid?

I have recently started a new job with a company. My ex-employer is threatening to take action against me on the basis of a restraint of trade I signed when I was employed by them. I don’t even remember signing it! Are restraints of trade even valid?

A:

Yes, restraints of trade are valid (at face value). But you can have it declared unenforceable if you’re able to show that it is unreasonable. You would need to determine whether your previous employer had any proprietary interests that needed to be protected. For example, were you privy to:

• the employer’s confidential information? Ie. Information that is not in the public domain, is capable of application in the industry, is not generally known by people, and has economic value to the employer; or
• the employer’s trade connections? Ie. Relationships with customers, prospective customers and suppliers. In particular, was your relationship with them strong enough to persuade them to move with you to your new place of employment?

If your answer to either of these questions is “yes” then there is a good chance that the restraint would be declared valid. Either way, it is vital that you consult an attorney who will determine your legal position on the basis of all the facts in the matter.

 

Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.