Can Quillio draft restraint of trade clauses?
Yes. I draft restraint of trade clauses for employment contracts, shareholder agreements, and business sale agreements. I use cascading tiers (so if the widest restraint is unenforceable, a narrower one applies) and I draft to protect legitimate interests without going further than necessary. The NSW Restraints of Trade Act 1976 is applied where relevant.
Cascading restraints
Australian courts will not rewrite an unreasonable restraint — they will strike it down. The standard technique is to draft cascading restraints: multiple tiers of duration and geographic scope, with a clause that says the narrowest enforceable tier applies. I draft these cascades so that your client always has some protection.
Employment versus business sale
The test for enforceability is different depending on context. Business sale restraints are enforced more readily (because the buyer paid for goodwill) than employment restraints (where the balance of power is different). I draft employment restraints more conservatively than business sale restraints.
Legitimate interest
A restraint must protect a legitimate interest — goodwill, confidential information, client connections, or staff connections. I identify the legitimate interest and draft the restraint to protect it specifically. Restraints that are not tied to a legitimate interest are the first to be struck down.
Step-by-step
- Tell me the context. Employment or business sale, and which side you act for.
- Provide the factual background. What is being protected (customers, staff, trade secrets), the geographic market, and the commercial reality.
- Review the draft. I return a cascading restraint drafted to protect the legitimate interest.
- Insert into the contract. Drop the clause into the employment or sale contract.
Common issues
- NSW uses the Restraints of Trade Act 1976 which allows the court to read down rather than strike — I apply it
- Very wide geographic restraints (for example, Australia-wide) need specific justification
- Restraints on former employees of former employees are generally unenforceable — I flag this
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