Restraint of Trade Archives - Ashersons Attorneys

13 May 2021

Companies: Are Restraints of Trade Valid in a Time of Covid?

Consider this unhappy (but not unlikely) scenario: For whatever reason, you part ways with your fellow director/shareholder (or perhaps a key employee), who goes off immediately to join (or found) the opposition. Now you have a major problem – he/she was privy to all your trade secrets and confidential information and they are now being used to compete against you. Your business could be crippled. Using the time-tested restraint of trade clause An effective and time-tested way of protecting your business from such a risk is to insist on all directors, shareholders and key employees signing restraint of trade agreements…

How to Stop an Ex-Director from Competing With You

What happens if relations between you and your fellow company directors sour to the extent that a director leaves? Can he or she immediately open up a new business in direct competition to you? A recent High Court decision both addresses that knotty question, and highlights a quick and easy solution. Fishing for business: “Big Catch” claims R24m Big Catch Fishing Tackle (Pty) Ltd markets and hosts fishing and fly fishing tours in both local and international waters. The company’s two directors and shareholders fell out, culminating in one director accusing the other of serious breaches of his duties as…

Selling a business with Goodwill: Beware this Implied Prohibition

When you sell a business including its “goodwill”, you will likely be prevented from opening up in competition with your old business by a “restraint of trade clause” in the sale agreement. Your 5 year restraint period lapses – what next? Restraint clauses have to be reasonable in duration, so somewhere along the line your restraint period will lapse. And when that happens, you may think that you are now completely free to set up shop again. (more…)