Agreements That Represent An Unreasonable Restraint Of Trade Are
A limitation of the trade clause limits a worker`s ability to accept a future job, which could be to the detriment of his current employer, usually because he is a competitor and the worker has access to confidential information. The Tribunal stated in Reddy/Siemens  SCA 164 that “the material right, as provided in Magna Alloys, is that a restriction is enforceable, unless it proves inappropriate, which necessarily places a constraint on the person attempting to escape it.” In noting the adequacy, the Tribunal considers the public interest that requires the parties to respect their contractual obligations, contrary to the interests of society, which allows individuals to act freely and to be employed in the profession of their choice. Trade restriction is a very old legal concept that refers to the right of individuals to do business or to practice a profession freely and without restriction. The original case that motivated the concept of trade restriction was in England in the 1890s. Arms manufacturer Thorsten Nordenfelt had sold his business, and both parties had agreed that the seller “would not manufacture weapons or ammunition anywhere in the world and would not compete with Maxim for 25 years.” The case was heard by the House of Lords, which considered that: A contract in commercial restraint is a contract in which a party (convening it) has agreed with any other party (the Convenentee) to limit its freedom in the future to exercise trade with other persons who are not contracting parties in the way it wants. Lord Justice Diplock LJ in Petrofina (Great Britain) Ltd v Martin  Ch 146, 180 defined a trade restriction as follows: This followed in Broad v Jolyffe and Mitchel v Reynolds, where Lord Macclesfield asked: “What does it mean for one craftsman in London what does another in Newcastle?” In these times of such slow communication and trade throughout the country, it seemed axiomatic that general restraint did not fulfil any legitimate purpose for business and should not be valid. But as early as 1880 Lord Justice Fry in Roussillon declared that unlimited restraint in space should not be obsolete, for the real question was whether it went beyond what is necessary to protect the promise. In Nordenfelt, Lord Macnaghten decided that if one could validly promise “not to make weapons or ammunition anywhere in the world,” it was an unseemly reluctance to “not compete in any way with Maxim.” This approach in England was confirmed by Mason`s House of Lords against The Provident Supply and Clothing Co. Restriction of trade clauses is not unusual in trade agreements. They prevent one party from competing with the other during and after the agreement. They may be related to employment restrictions, restrictions between partners and restrictions on a contract to sell a business. For example, an employer may include a trade limitation clause to protect its business interests by preventing a worker from using its systems, customers and intellectual property for the benefit of a competitor. For example, a provision in the employment contract prohibiting a former worker from setting up a competing business for five years within 100 miles of the former employer would likely be struck off because it constitutes a commercial restriction.
On the other hand, if the containment area was smaller and the period was shorter, the contract provision could be maintained. Contracting parties will often develop restriction clauses to provide for different restrictions, in the hope that if one or more restrictions are deemed inappropriate, others will survive.