MRL3702 law
Semester 1
EXAM-PORTFOLIO YEAR 2022
WEALIGHT TUTORIALS
CALL OR WHATSAPP; +27611279778
EMAIL;
, Question 1
1.1
An employer may enter into a contract in restraint of trade, or include such a clause
in the employment contract, in order to protect its business from competition from ex-
employees. A restraint of trade clause prevents an employee, in various ways, from
exercising his or her trade, profession or calling, or engaging in the same business
venture as the employer, for a specified period and within a specified area after
leaving employment. A clause in restraint of trade prevents an employee from
exercising his trade, profession or calling, or engaging in the same business venture
as the employer, for a specified period and within a specified area after leaving
employment. A restraint-of-trade clause is normally included in employment
contracts to protect the interests of the employer against unfair competition from
employees after their employment has ended. The purpose of a restraint-of-trade
agreement is to protect the employer’s trade secrets, goodwill and business
connections.
In most cases, the employee is in a weaker bargaining position and will not really be
able to negotiate the terms of the contract – the employee will just have to accept the
restraint of trade. It is lawful and enforceable, unless it is unreasonable. It must be
judged by the criterion of public policy. In Magna Alloys & Research SA (Pty) Ltd v
Ellis1 the court had to rule on the enforceability of a restraint-of-trade agreement and
balanced the competing interests of the employer and employee. It held that a
restraint-of-trade agreement was valid and enforceable unless it was contrary to
public policy, which it would be if it is unreasonable. Reasonableness will be
determined with reference to the interests of both the employer and the employee,
public policy and surrounding circumstances. The effect of a restraint of trade clause
continues even after the contract of employment has been terminated, regardless of
the reason for that termination.
The restraint of trade has to pass the test of reasonableness, the important factors to
consider will include the area within which the restraint of trade applies, the period of
the restraint and whether the employer is not merely trying to prohibit the ex-
employee from using her or his skills and or experience to earn a living. Therefore,
1
1984 (4) SA 874 (A).
Semester 1
EXAM-PORTFOLIO YEAR 2022
WEALIGHT TUTORIALS
CALL OR WHATSAPP; +27611279778
EMAIL;
, Question 1
1.1
An employer may enter into a contract in restraint of trade, or include such a clause
in the employment contract, in order to protect its business from competition from ex-
employees. A restraint of trade clause prevents an employee, in various ways, from
exercising his or her trade, profession or calling, or engaging in the same business
venture as the employer, for a specified period and within a specified area after
leaving employment. A clause in restraint of trade prevents an employee from
exercising his trade, profession or calling, or engaging in the same business venture
as the employer, for a specified period and within a specified area after leaving
employment. A restraint-of-trade clause is normally included in employment
contracts to protect the interests of the employer against unfair competition from
employees after their employment has ended. The purpose of a restraint-of-trade
agreement is to protect the employer’s trade secrets, goodwill and business
connections.
In most cases, the employee is in a weaker bargaining position and will not really be
able to negotiate the terms of the contract – the employee will just have to accept the
restraint of trade. It is lawful and enforceable, unless it is unreasonable. It must be
judged by the criterion of public policy. In Magna Alloys & Research SA (Pty) Ltd v
Ellis1 the court had to rule on the enforceability of a restraint-of-trade agreement and
balanced the competing interests of the employer and employee. It held that a
restraint-of-trade agreement was valid and enforceable unless it was contrary to
public policy, which it would be if it is unreasonable. Reasonableness will be
determined with reference to the interests of both the employer and the employee,
public policy and surrounding circumstances. The effect of a restraint of trade clause
continues even after the contract of employment has been terminated, regardless of
the reason for that termination.
The restraint of trade has to pass the test of reasonableness, the important factors to
consider will include the area within which the restraint of trade applies, the period of
the restraint and whether the employer is not merely trying to prohibit the ex-
employee from using her or his skills and or experience to earn a living. Therefore,
1
1984 (4) SA 874 (A).
