Supreme Court Revisits Restraint of Trade

20 September 2021
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The Supreme Court in Harcus Sinclair LLP v Your Lawyers Ltd [2021] UKSC 32 considered the application of the doctrine of restraint of trade to a novel fact pattern and held that:

  • When considering whether a non-compete clause is reasonable, the parties’ non-contractual intentions (assessed objectively at the time the contract was made) may be taken into account. This signifies a departure from a slavish contractual construction exercise and  is to be contrasted with a number of previous authorities which had approached this question almost entirely through the lens of strict attention to the contractual provisions.
  • Where two parties are of equal bargaining power, a court should approach the question of whether or not the restraint clause is reasonable on the basis that such parties can generally be expected to look after their own interests and agree terms which are reasonable between themselves.
  • The scope and duration of the contractual restrictions are also relevant in determining whether the restriction is reasonable.