Crisp v Chapman

The New South Wales Court of Appeal considered a dispute between the appellant, Mr Crisp, and the respondent, Mr Chapman, concerning the interpretation and enforceability of a written agreement. The agreement in question related to the sale of a business and contained a restrictive covenant intended to prevent the vendor from competing with the purchaser.

The central legal issues before the Court of Appeal were whether the restrictive covenant was void for uncertainty and, if not, whether it was reasonable and therefore enforceable. The Court was required to assess the scope and duration of the restraint imposed by the covenant and determine if it went beyond what was necessary to protect the legitimate business interests of the purchaser.

The Court of Appeal found that the restrictive covenant was void for uncertainty. It reasoned that the wording of the covenant was too vague and ambiguous to define with sufficient clarity the activities that were prohibited. Consequently, the Court held that it was impossible to determine the precise extent of the restraint, rendering it unenforceable. The principles applied focused on the requirement for restrictive covenants to be clear, precise, and no wider than necessary to protect a legitimate proprietary interest.

The Court of Appeal allowed the appeal, setting aside the orders of the primary judge and ordering that the plaintiff's statement of claim be dismissed.