Current circumstances may include considering the impact of COVID-19 on the South African economy and the availability of work at this particular time. This may be a relevant factor for the future, but it would not necessarily be decisive in determining whether a restriction is inappropriate. Based on this decision, it emerged that employers may have difficulty enforcing their trade restrictions during the COVID-19 pandemic. This was of particular concern to employers who wanted to protect their wealth interests, especially in circumstances where the COVID-19 pandemic seems to be with us for some time to come. In other cases, the question was raised as to whether the restriction was necessary and complementary in order to obtain only something undignified in view of the resulting harm. In a recent case, a court rejected an attempt by a credit card issuer to justify a restriction on competitive businesses deemed reasonably necessary to promote «loyalty» and «cohesion.» [17] How necessary and necessary for what remains such controversial issues under the teaching of Mitchel v. Reynolds. Earlier this year, the High Court judgment in Out of Home Media (Pty) Limited v. Brien and another focused on the issue of the application of a trade restriction during the COVID-19 pandemic. In this case, the court essentially concluded that it would be inappropriate and contrary to public policy to maintain a trade restriction during the COVID-19 pandemic and therefore refused to maintain an otherwise valid restriction to the trade agreement for this particular reason. The common law has evolved with the evolution of the modalities.
For example, in Rogers v. Parry,[4] in the early 17th century, it was concluded that a promise made by a carpenter not to act from his home for 21 years was enforceable against him because time and place were safe. It was also noted (by Coke C.J.) that a man cannot commit to not practising his profession in general. The Court stressed that the «principle of adequacy» would be the most important consideration if they were to govern the restriction of commercial clauses. The Court also considers whether an interest merits protection, also known as a «protectable interest». In addition, it is likely that the respondent will respond to this knowledge. Finally, the General Court found that the possibility of discrimination was obvious in the present case, since the defendant had not stated its position not to use the information. In Prima Interactive (Pty) Ltd v. Lemon and others, Justice van Niekerk rejected the High Court`s approach, saying that at the time of the High Court`s decision, as well as at present, COVID-19 not only had a detrimental effect on workers, but that employers were also made very vulnerable. Since restrictive commitments are made to protect the legitimate property interests of companies, this should not be affected by an employee`s difficulty in obtaining employment, regardless of the cause. In assessing whether the restriction was proportionate, the court highlighted the situation prevailing at the time of the enforcement of the restriction.
The court found it relevant that the company owed Mr. Brien more than ZAR 1.2 million at the time the restriction was applied, a situation that had prevailed for some time. The court noted that a healthy employment relationship was unlikely to last in such a situation. Mr. Brien`s departure seemed to be the most viable option available to him because of the company`s behaviour. It is important to note that there is no codified legal principle of trade restriction in South African legislation. The concept of trade restriction therefore arose from the principle of unlawful competition and was codified by a trade restriction clause in a contract. Since trade restriction clauses are based on the principle of unlawful competition, it is necessary to examine what constitutes unlawful competition in the context of employment. The basic principles of all labour laws in South Africa are found in the Constitution. Section 18 of the Constitution grants every South African citizen the right to freedom of association and section 22 grants the right to freely choose his or her profession, profession or profession.
With regard to article 23, every South African citizen has the right to fair labour practices. Competition Act 89 of 1998 (the Act) does not contain a clear definition of concurrency competition, but proposes to prohibit it by its purpose. The law also prohibits horizontal and vertical practices between undertakings, the definition of which includes a natural person such as a worker, where such practices have the effect of preventing or significantly reducing competition in the market. However, where a party to the agreement can demonstrate that a technological, efficient or other competitive advantage resulting from the agreement outweighs the effect, such horizontal and vertical practices may be allowed. The doctrine of trade restriction is based on the two concepts of prohibition of agreements contrary to public policy, unless the appropriateness of an agreement can be demonstrated. A trade restriction is simply an agreed type of provision to restrict someone else`s trade. For example, Nordenfelt promised against Maxim, Nordenfelt Guns and Ammunition Co[2], a Swedish weapons inventor when selling his business to an American arms manufacturer, that he «would not manufacture weapons or ammunition anywhere in the world and would not compete with Maxim in any way.» A clause restricting trade is defined as a provision of an employment contract which provides that, in the event of termination of the employment relationship, the employee may be restricted or restricted within his geographical boundaries and future entrepreneurial spirit. A trade restriction clause is a provision of the employment contract that states that an employee is geographically limited to working in the same industry or competitive environment.
In prohibiting Reddy from holding employment at Ericsson, the court found that the restriction was intended to prevent a person with knowledge of confidential technologies from using them to the detriment of the employer because of his employment: Mr. Brien resigned and took a job with a competitor of the company. As regards a restriction of the commercial agreement between Mr Brien and the company, Mr Brien agreed to be subordinated, inter alia, to a competitor of the company for a period of 18 months from the date of termination of his employment relationship. . In the United States, the first important discussion took place in the Sixth Circuit opinion by Chief Justice (later President of the United States and even later Chief Justice of the Supreme Court) William Howard Taft in United States v. Addyston Pipe & Steel Co.[9] Justice Taft stated that the Sherman Antitrust Act of 1890[10] was a legal codification of the English common law doctrine of trade restriction, as explained in cases such as Mitchel v Reynolds. [11] The Court distinguished between mere restrictions on trade and those that complement the legitimate principal purpose of a legitimate contract and are reasonably necessary to achieve that objective. [12] An example of the latter would be a non-compete obligation in connection with the rental or sale of a bakery, as in Mitchel. Such a treaty should be examined according to a «rule of reason», i.e. it should be considered legitimate if it is «necessary and incidental».
An example of the naked nature of the restriction would be the pricing and tendering agreements in addyston. Taft said: «We don`t think there is a question of open suitability to the courts for such a contract.» The Supreme Court upheld the decision. Over the next century, Justice Taft`s opinion on Addyston Pipe remained fundamental to antitrust analysis. [13] The increase in the increasing number of reported and unreported restriction cases inside and outside Law Reports reflects the importance of restriction agreements and their applicability, as well as the unusually charged atmosphere of urgent restriction request procedures. Although the doctrine of trade restriction is still in force, its current use in most countries has been limited by modern and economic competition law laws. It remains of considerable importance in the United States, as is the case in Mitchel v. Reynolds. In order to determine whether a restriction on trade is appropriate, in basson v. Chilwan and Others in 1993 (3) SA 742 (A), the Court established a criterion consisting of four questions: public policy requires compliance with agreements freely concluded. At the same time, public policies stipulate that individuals must be free to participate in economic activities to earn a living. This is a right enshrined in article 22 of the Constitution, which gives everyone the right to freely choose a profession, profession or profession. A court is therefore required to weigh these considerations against a value judgment on whether a restriction is appropriate.
A contractual obligation not to trade is void against the donor and unenforceable because it is contrary to public policy of commercial promotion, unless the restriction of trade is appropriate to protect the interests of the buyer of a business. [2] Trade restrictions may also occur in restrictive agreements subsequent to the termination of employment contracts. .