‘Reasonable’ restraint of trade clausesContracts in restraint of trade (irrespective of category), are prima facievoid andunenforceable. However, a restraint can be valid if it is no wider than is necessaryto protectthe legitimate interests which it is designed to protect. ‘Width’ in this context has both timeand space dimensions. A valid restraint of trade clause can only restrict the affected party’sbehaviour within the precise geographical area in which he or she could adversely affect theother party’s legitimate interests and it can only last as long as the restraint isreasonablynecessaryto ensure that that interest is not prejudiced. Anything wider will generally beinvalid.For example, assume that X has a small suburban legal practice in Townsville and employsa number of solicitors (including Y). His employment contracts all contain restraint of tradeclauses. Y’s contract provides that if he leaves X’s employ he will not work as a solicitoranywhere in Queensland for a period of ten years. That restriction is far wider in both timeand space terms than is necessary to protect X’s legitimate business interests — in thiscase the clients that Y could possibly entice away if he set up a practice close to where Xoperates. Consequently it would be completelyinvalid. Had X limited the scope of theclause to something more reasonable — say, restricting Y’s ability to set up in the samesuburb or within a radius of ten kilometres from it (where he could conceivably poach X’sclients) and for a period of two years instead of ten years (when the clients mightconceivably still remember Y and be influenced to transfer their allegiance and theirbusiness to him) it could be enforceable.Consequences of void contracts
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