This blog was co-authored by Jessica Blunden, Candidate Attorney
The recent judgment in Ashton International College Ballito (Pty) Ltd v Erasmus and Another serves as a deterrent to practitioners and clients not to copy and paste clauses obtained from precedents into agreements without proper thought and it emphasises the need for accurate drafting.
This case concerned an attempt by Ashton International College Ballito (Pty) Ltd (Ashton) to interdict its previous headmaster and managing director from breaching several restraint of trade clauses contained in a mutual separation agreement when he sought to take up employment with Curro Salt Rock Primary School (Pty) Ltd (Curro). The restraint of trade clauses were described by the court as being a “so-called” restraint of agreement for two reasons.
Firstly, the agreement was poorly drafted, to an extent that its enforcement was impossible. The court detailed the number of clauses within the agreement where one was unable to determine any sense of its intended meaning. The court found that, the clauses were merely a “cut and paste exercise” with parties having relied on an ill-fitting precedent without ensuring its accuracy and applicability. An example was references to an industry in which the headmaster was not employed, and references to “customers, suppliers” and unspecified items which had not been defined in the agreement and had no applicability to the restraint of a school headmaster.
Secondly, the agreement failed to identify a protectable interest worthy of protection, which is one of the factors that is taken into account by a court in determining the enforceability of a restraint of trade. Trade connections, trade secrets and confidential information are recognised as protectable interests. A restraint of trade agreement is invalid and unenforceable where there is no identifiable protectable interest that is worthy of protection. In this case, Ashton failed to establish that it had a genuine protectable interest warranting restraint of trade, therefore, the “so-called” restraint of trade agreement was held to be against public policy and unenforceable as its sole aim was to stifle competition.
The judgment emphasises the need for restraint of trade agreements to be carefully drafted taking into account the field and area in which the parties operate (scope), the purpose for the restraint, the identifiable interest that is sought to be protected, and taking into account the employee’s right to trade freely and fairly in a particular area or profession that he has the necessary skills and qualifications to work in. A restraint that simply seeks to sterilise lawful competition will not be upheld.
