CONTRACT LAW Essay Example | Topics and Well Written Essays - 1000 words

CONTRACT LAW - Essay Example This however is the general rule with the courts being willing to enforce the same in certain situations. This was laid down in the case of Nordenfelt v Maxim Nordenfelt( (1894) AC 535 by Lord Macnaughten who stated that â€Å"The public have an interest in every person’s carrying on his trade freely; so has the individual. All interference with the individual liberty of action in trading, and all restraints of trade themselves, if there is nothing more, are contrary to public policy and therefore void. That is the general rule. But there are exceptions; restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed the only justification, if the restraint is reasonable- reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protec tion to the party in whose favour it is imposed, while, at the same time is in no way injurious to the public...† It is in this light therefore that Dr. Smith’s contract of employment needs to viewed. Prima facie section 10 of her employment contract is void and her bosses at BUPA will not be able to rely on it. If however, they can prove that they fall within one of the exceptions that the court has laid down they will be able to successfully rely on the said action and prevent Dr. Smith from starting her new job. For Dr. Smith’s bosses to succeed it is not enough that they show that the clause is reasonable between the parties. They must also prove that the clause is reasonable in the public interest. It is noteworthy that The burden of showing that a covenant is in the interests of the parties lies with the employer. The onus of proving that it is contrary to the public interest lies with the employee: Kores Manufacturing Company Limited v Kolok Manufacturing Company Limited [1959] (CA) Ch D 109.2 We will look at the first aspect in detail over the next few paragraphs. In deciding whether or not the section 10 of the employment contract in question is reasonable between the parties the courts will look at (a) whether the clause protects a legitimate interest of the employer and (b) is whether or not the clause is reasonable in terms of subject matter, locality and duration. When looking at whether a restraint of trade clause protects the legitimate interest of the employer the court has looked to see if the employer has â€Å" some proprietary right, whether in the nature of a trade connection or in the nature of trade secrets for the protection of which such a restraint is†¦reasonably necessary†.3 The courts have further said however that an employer is not entitled to protect himself against the use of the â€Å"personal skill and knowledge† acquired by the employee in the course of the employer’s business. Su ch skills belong to the employee and he is free to exploit them in the market place.4 In the Dr. Smith’s case the BUPA bosses will succeed in their action if they are able to show that they would