Extraman (NT) Pty Ltd v Blenkinship

In the case of Extraman (NT) Pty Ltd v Blenkinship, the dispute arose from the sale of shares in two companies operating a business in the Northern Territory. The parties had entered into an agreement containing a restraint of trade clause, which the buyer sought to enforce against the seller. The matter was heard by the Federal Court of Australia.

The primary legal issues the court had to address were whether the restraint of trade clause was void for uncertainty, whether it was contrary to public policy, and whether the limitations imposed by the clause regarding area and time were reasonable. The court also needed to determine whether the restraint of trade was enforceable against the seller.

The court began by examining the restraint of trade clause to determine if it was certain enough to be enforced. The clause in question was found to be clear and specific enough to be considered enforceable. The court then assessed whether the restraint was contrary to public policy, noting that restraints of trade are generally permissible unless they contravene public policy. The court found that the restraint did not contravene public policy as it was necessary to protect the legitimate business interests of the purchaser. Furthermore, the court considered the limitations of the restraint in terms of area and time, finding them to be reasonable given the nature of the business and the need to protect goodwill. The court concluded that the restraint of trade was enforceable.

As a result of the court's decision, the restraint of trade clause in the agreement for the sale of shares was upheld as valid and enforceable. This means that the seller was bound by the terms of the restraint, preventing them from engaging in competing activities within the specified area and timeframe. The court's decision ensured that the purchaser's business interests were protected, and the terms of the agreement were upheld.