Cream v Bushcolt Pty Ltd

The case of Cream v Bushcolt Pty Ltd involved a dispute between the plaintiff, Cream, and the defendant, Bushcolt Pty Ltd, regarding the enforceability of certain restrictive covenants in a contract. The case was heard in the Supreme Court of Western Australia. The primary issue before the court was whether the restrictive covenants in the contract, which sought to restrain the plaintiff from engaging in the livestock transport industry for a period of ten years and from operating anywhere in the state, were reasonable and enforceable.

The court examined the nature of the business, which was based in Geraldton and primarily operated in the Mid-West, Gascoyne, and Murchison areas, with some business extending to the Lower West of the State. The court held that the statewide restraint was unreasonable, as it exceeded the geographical scope necessary to protect the legitimate business interests of the defendant. Furthermore, the court found that the restraint clauses prohibiting the plaintiff from being involved in any way, directly or indirectly, in the livestock transport industry were also unreasonable. The cumulative effect of these restraints rendered the covenant in restraint of trade void.

In reaching its decision, the court considered the appellant's statement during negotiations that he intended to leave the livestock transport industry permanently. The court found this statement to be honest and based on reasonable grounds, and thus the appellant was not precluded from involvement in the livestock transport industry by the doctrine of promissory estoppel. Consequently, the appeal was allowed, the relevant provisions in the contract in restraint of trade were held void and unenforceable, and the cross-appeal was dismissed.