- Explanatory note.
- Star Limited.
- Limiting an employee from working within 25 miles of London.
- The business interests recognised by law.
- The problem for Star Limited.
- Exception to the corporate liability principle.
From Star Limited's perspective, the central issue is whether it can enforce the restraint of trade clause against Ramon notwithstanding the fact that he is using his company Equip Limited to solicit Star Limited's customers. Before considering whether the clause can be enforced against Ramon personally, it will be necessary to firstly determine if the clause itself is valid. With regard to Helga, it will be necessary to consider her rights under the pre-existing agreement with Ramon to sell the property to her, and whether this can be enforced against him personally or alternatively Equip Limited due to the circumstances of the transfer of the property to Equip Limited to prevent sale. I shall address the legal position of each party respectively and conclude with a summary of the legal position.
[...] to consider her rights under the pre-existing agreement with Ramon to sell the property to her, and whether this can be enforced against him personally or alternatively Equip Limited due to the circumstances of the transfer of the property to Equip Limited to prevent sale. I shall address the legal position of each party respectively and conclude with a summary of the legal position. Star Limited With regard to Star Limited, in addition to being a director, Ramon was an employee with a service contract and the initial point to determine is whether the restrictive covenant preventing him from soliciting their customers Star Limited's customers is valid per se. [...]
[...] This principle was developed further in the case of Stenhouse Australia Limited v Phillips where Lord Wilberforce asserted that: employer's claim for protection must be based on the identification of some advantage or asset inherent in the business which can be properly regarded as, in a generally sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though the employee may have contributed to its creation.? The business interests recognised by law include customer connections and the rationale of the Stenhouse decision was based on the fact that an employee should not be able to take unfair advantage of confidential information and business connections to which they had access during employment. [...]
[...] The main stumbling block will be the two- year length of the restriction however whether this is justifiable will depend on Star Limited's ability to establish that the nature of the business, industry and goodwill justified the length of the restriction However, the problem for Star Limited is that Ramon has incorporated a new company Equip Limited and furthermore Ramon is using Equip Limited to solicit customers and employees of Star Limited. In the landmark case of Salomon v Salomon it was established that a company, once incorporated will take effect as a legal entity in its own right, with separate legal identity from its members. [...]