Commentary

229.2 The courts’ attitude to restrictive covenants

BUSINESSES vol 4(2) start-up, sale and purchase
| Commentary

229.2 The courts’ attitude to restrictive covenants

| Commentary

229.2 The courts’ attitude to restrictive covenants

Although the covenants referred to above are legitimately designed to protect the value of the goodwill transferred, they nevertheless inhibit the seller’s freedom of action. A legal adviser must therefore take great care in drafting these covenants to ensure that they are not void as being in unreasonable restraint of trade. The good news is that the courts take a more relaxed view of covenants between the seller and buyer of a business than they do of covenants between an employer and former employee1. In particular, a buyer of a business

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