Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

BUSINESS LAW1
Table of Contents
Question 1......................................................................................................................2
Question 2......................................................................................................................5
References......................................................................................................................8

BUSINESS LAW2
Question 1
Issue
The issue of the given case is to determine the legal position of David against whom
legal actions could be brought for breaching the restraint of trade clause.
Law
Restraint of trade clause prevents a person from working in the similar trade or getting
engaged in similar occupation for such person becomes a threat to the business of his last
employer as he has an insight of the internal governance of his last company along with many
other things that an employee should and an outsider or competitor should not know (Dent,
2013). It is a usual scenario that a person would want to start his own venture in the similar
field once he resigns or is terminated from one particular industry as he hold years of
experience and client contacts in that field, therefore it would easier for him to flourish in that
industry. Thus, it is similarly natural for an organisation to refrain its ex-employees from
engaging into a similar industry as otherwise there are chances that such organisation may
experience challenges from such ex-employees engaging themselves in the industry (Dent,
2013).
In Australia, the Restraint of Trade Act 1976 deals with matters relating to restraint of
trade clauses with the help of Competition and Consumer Act 2010. The legislations
empowers a company to incorporate restraint of trade clause in its agreement for service that
the employees are supposed to sign while the join the company by agreeing to be restraint
from working in the same field after they resign from the company or if they are terminated,
where the clause may vary from one situation to the other (Dent, 2013). However, the
legislations direct the companies to incorporate such restraint clauses by paying attention to
its necessity and reasonableness pertaining to its imposition as held in the case of Petrofina
(Great Britain) Ltd v Martin [1996] Ch 146, 180. It is argues that the restraint clause so