A Restraint Of Trade Clause

918 WordsApr 18, 20164 Pages
A restraint of trade clause is a provision inserted into an employment contract to regulate the conduct and activities of an employer and employee once the employment relationship has ended. Often, a restraint of trade provision prohibits a former employee from competing against the business of the employer for a defined period of time after the termination of employment, or within a certain geographical location. Where a restraint of trade is found to be valid but unjust, an employee may seek recourse in equity for relief. Although, there is no one significant equitable remedy for resisting the enforcement of restraint of trade clauses in employment contracts, certain authorities tend to indicate that the most effective equitable remedy is an injunction, paired with declaratory relief. An injunction is an equitable remedy commonly used to prevent interference with equitable rights (in its exclusive jurisdiction) or to assist in the enforcement of legal obligations (in its auxiliary jurisdiction). The remedy will only be available where the applicant’s right has been infringed and there is no adequate remedy at law to correct the wrong (although it may be awarded in conjunction with other remedies). Further, the remedy is discretionary. An injunction is a remedy in which the court orders a party to perform some positive act (a mandatory injunction) or refrain from performing a particular act (a prohibitory injunction). In a situation where an employee
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