Herlihy v Leitch

Herlihy v Leitch concerned a dispute between the appellant, Herlihy, and the respondent, Leitch, heard before the High Court of Australia. The core of the disagreement revolved around the interpretation and enforceability of a written agreement for the sale of a business, specifically concerning the inclusion of a restraint of trade clause. Herlihy sought to enforce this clause against Leitch, who had subsequently commenced a competing business.

The High Court was required to determine whether the restraint of trade clause within the sale agreement was reasonable and therefore enforceable. This involved considering whether the clause went beyond what was necessary to protect the legitimate interests of the purchaser, Herlihy, and whether it imposed an undue burden on Leitch's ability to earn a living. The court had to assess the scope, duration, and geographical reach of the restraint in light of established legal principles governing such clauses.

The court applied the well-settled principles of contract law concerning restraints of trade, which are prima facie void unless they can be shown to be reasonable. Reasonableness is assessed by balancing the interests of the parties and the public interest. The court considered the nature of the business being sold, the specific activities restrained, the period of the restraint, and the geographical area it covered. Ultimately, the High Court found that the restraint of trade clause was wider than necessary to protect Herlihy's legitimate business interests and was therefore void and unenforceable.