Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd

In *Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd* [1991] NSWCA 183, the New South Wales Court of Appeal considered a dispute between Majik Markets Pty Ltd (the appellant) and Brake and Service Centre Drummoyne Pty Ltd (the respondent). The core of the disagreement concerned the interpretation and enforceability of a restraint of trade clause within a franchise agreement.

The primary legal issue before the Court of Appeal was whether the restraint of trade clause, which sought to prevent the respondent from operating a competing business within a specified radius and for a defined period after the termination of the franchise agreement, was reasonable and therefore legally enforceable. This involved assessing whether the clause went beyond what was necessary to protect the legitimate business interests of Majik Markets.

The Court analysed the clause in light of established principles governing restraints of trade, considering the scope of the restricted activities, the geographical area covered, and the duration of the restraint. It was held that the restraint was wider than necessary to protect Majik Markets' legitimate interests in its trade connection and goodwill. The Court found that the clause unduly restricted the respondent's ability to earn a livelihood in the automotive repair industry, an industry in which the respondent had developed significant expertise and goodwill during the franchise period. Consequently, the restraint was deemed void as being contrary to public policy.