The Validity Of Restraint Of Trade Agreements

The following questions were asked in the case of Vodacom (Pty) Ltd/Motsa and Another (J 74/16) [2016] ZALCJHB 53. Vodacom was awarded the contract of an executive that included six months` notice and a commercial restriction for a further six months after the notice period expired. The Supreme Court`s decision of the Standard Oil Company of New Jersey against the United States in 1911 was based on an analysis of Taft`s reason rule. In that case, the Court found that a contract contravened the Sherman Act only if the treaty “unduly” limited trade, i.e. where the treaty had monopolistic consequences. According to the Court, a broader meaning would prohibit normal and usual contracts, thus violating contractual freedom. Accordingly, the Court approved the motivational rule set out in Addyston Pipe, which in turn stems from Mitchel v. Reynolds and the common law of trade restrictions. In determining the adequacy of an employer`s trade restriction, a court will consider the company`s ownership interest in relation to the extent of the restriction on the geographic area and duration of the restriction and the capacity in which the worker is prevented from working. It is advisable: to ensure that the trade clause is clear and deductible with regard to the period of application, the area in which it is applied and the capacity in which the person is selected in order for the court to impose the restriction of the trade agreement A limitation of the trade clause limits a worker`s ability to accept a future job that could be at the expense of his current employer, usually because he is a competitor and the worker has access to confidential information. To be a valid trade restriction, both parties must have provided a valuable consideration for their agreement to be applicable. In Dyer,[3] a dry cleaner had taken a loan not to operate in the same city as the complainant for six months, but the complainant had not promised anything.

When Hull J. heard the complainant`s attempt to impose this deduction, he exclaimed: “If the complainant was there, he should go to jail until he has paid a fine to the king.” In the United States, the first major discussion took place in the statement of the chief of the court (later President of the United States, then Supreme Justice of the Court) William Howard Taft in the United States.

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