When considering the reasonableness of an employee’s restrictive covenant, the court must test it at the time when it was entered into. If a covenant was unreasonable it will be wholly unenforceable – not partly unenforceable to the extent of what the outcome turned out to be: ‘The defendant was in fact employed for over six years by the plaintiffs and no doubt became a valuable servant . . It is natural in those circumstances to look at what in fact happened under the agreement. But the question of the validity of a covenant in restraint of trade has to be determined at the date at which the agreement was entered into and has to be determined in the light of what may happen under the agreement, although what may happen may cover many possibilities which in the result did not happen. A covenant of this kind is invalid ab initio or valid ab initio. There cannot come a moment at which it passes from the class of invalid into that of valid covenants.’
Judges:
Diplock LJ
Citations:
[1965] 1 WLR 1366
Jurisdiction:
England and Wales
Cited by:
Cited – Allan Janes Llp v Johal ChD 23-Feb-2006
The claimant sought to enforce a restrictive covenant against the defendant a former assistant solicitor as to non-competition within a certain distance of the practice for a period of three years. After leaving she had sought to set up partnership . .
Lists of cited by and citing cases may be incomplete.
Employment
Updated: 27 November 2022; Ref: scu.240030