Eckett Enterprises Pty Limited v Cosmetic Technical Services Pty Limimted

Eckett Enterprises Pty Limited (the appellant) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation and enforceability of a restraint of trade clause contained within a contract for the sale of a business.

The primary legal issue before the Court of Appeal was whether the restraint of trade clause, which purported to prevent the vendor from engaging in a competing business within a specified geographical area and for a defined period, was reasonable and therefore legally enforceable. This required the court to consider the scope of the restraint in relation to the legitimate interests of the purchaser to protect the goodwill of the business acquired.

The Court of Appeal found that the restraint of trade clause was unreasonably broad in its geographical scope and duration, and therefore void. The court applied the established legal principles governing restraints of trade, which require such clauses to be no wider than is reasonably necessary to protect the legitimate business interests of the party seeking to enforce the restraint. In this instance, the court determined that the restraint went beyond what was necessary to protect the goodwill of the business sold.

The appeal was dismissed, and the orders of the Supreme Court were affirmed.