The main issues are whether or not the court would consider that the restrictive covenant in issue is void for contrary to public policy.
The relevant legal principles are:
A covenant must be no wider than is necessary to protect the legitimate interest of the employer. Attempting to stifle competition is impermissible and it is irrelevant that the employer taught the ex-employee everything he knows.
The court area particular to prevent contracts, which seek to prevent an employee from practicing his livelihood. The courts have regard to three facts: -
The period during which the restriction purports to apply. -
The geographical area in which the restriction purports to apply. -
The scope of the restriction.
Ho Wing-cheong t/a Hong Leong Securities v. Graham Margot (1987) D worked as a stockbroker for P. There was a covenant that D could not seek employment with any other securities firms within 3 years after leaving this employment. Held: 3 years was too long to protect P’s legitimate interests.
More latitude may be allowed, where the restraint is directed solely towards protecting a company’s goodwill by prohibiting solicitation of established clients.
A contract in restraint of trade is prima facie void: Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd (1968)
Any term of a contract restraining trade is void except where it is shown to be reasonable and the court will not uphold a contract with such a term unless that term can be released.
Kao Lee & Yip v. Edwards (1994)
D worked with P solicitor firm as a salaried partner. The agreement contained a clause that if D left P, could not work as a solicitor for 5 years in the whole world. Held: The covenant was too wide in terms of both scope and duration and was void.
Applying the above legal principles it would appear that the restrictive covenant to the effect that Andrew is not allowed to work for another accounting firm in Hong Kong for a period of 3 months after...
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