ASSIGNMENT -
David and Cathy intend purchasing a restaurant business from a local entrepreneur. They wish to ensure that he cannot set up a competing restaurant or café in the area within 12 months after the purchase or they believe that the investment will not be viable.
Advise David and Cathy as to how far they can go with respect to restraining the vendor's freedom of trade.
What if they go too far?
Questions to consider in answering Question 8.7:
- What area of law is the question concerned with?
- Is a contract in restraint of tradevalid or void?
- If a contract in restraint of trade is prima facie void, what does this mean?
- How can David and Cathy protect themselves then? What factors determine whether a restraint is reasonable?
- What is the effect on David and Cathy if the clause they insert is not reasonable?
- See Nordenfelt v Maxim Nordenfelt Guns and Ammunition.
Assessment Criteria - Written presentation
- Identify the issues of the problem.
- Explain the relevant law relating to the problem.
- Discuss the potential legal arguments relating to the problem.
- Summarise a balanced conclusion to the issues of the problem.