The weight given to the doctrine of trade restriction and the potential impact on partners who wish to leave the company will likely mean that the anti-team-move clauses will require careful drafting – limit the limitation to certain circumstances (as well as their scope, duration and geographical location) in order to ensure their opposability. The deference of trade doctrine is based on the two concepts of prohibition of agreements that are contrary to public policy, unless the relevance of an agreement can be demonstrated. A trade restriction is simply a kind of agreed provision that aims to curb the trade of another. In Nordenfelt v Maxim, Nordenfelt Guns and Ammunition Co, for example, a Swedish arms inventor, by selling his business to an American arms manufacturer, promised that he would “not manufacture weapons or ammunition anywhere in the world and would in no way compete with Maxim.” The applicability of anti-team-move clauses is a novelty in the case law. No case decisions have yet been notified regarding this type of restriction. In addition to the issues relating to the likely applicability of such provisions, the absence of case law is likely due to the fact that companies that tend to use arbitration procedures (which are heard in private) and not litigation are contentious proceedings or that the parties reach a commercial agreement in this matter before the matter is dealt with. The applicants commenced proceedings against the defendants and asserted that the first defendant had competed with the applicants before the limitation period had expired by selling similar products. The parties challenged the allegation on the grounds that a five-year period was too long to limit trade in Australia and that the restriction of the trade clause was a “non-negotiable clause”. To be a valid trade restriction, both parties must have provided a valuable consideration for their agreement to be applicable.
In Dyer, 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.” Trade restrictions in England and the United Kingdom have been and remain defined as a legal contract between a buyer and seller of a business or between an employer and an employee that prevents the seller or worker from committing a similar business in a given geographical area and within a specified period of time. [Citation required] It intends to protect trade secrets or protected information, but it is applicable only if it is appropriate for the party against which it is collected and if it is not contrary to public policy. This followed in Broad v Jolyffe and Mitchel v Reynolds, where Lord Macclesfield asked, “What does it mean for a craftsman in London what does another do 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.