2. Contracts of employment

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses employment contracts. Covenants potentially in restraint of trade are express written terms which may apply during the contract, but are usually expressed to apply after termination. They are a rare illustration of contractual terms, which must be in writing. The general purpose of these is to prevent a former employee competing against his former employers; for example, by taking commercially confidential information or influencing customers to give their business to the firm he has joined. The Supreme Court has recently ruled on the width of the doctrine of severance of such covenants. Topics covered include the provision of the written statement, a right which employees have enjoyed since 1963, but which was extended to workers in 2020; the sources of terms in employment contracts; duties of the employer; and duties of the employee. These duties or implied terms are divided into terms implied in law (ie inserted into every contract of employment) and terms implied in fact (ie inserted into a particular contract of employment). The latter are divided into terms implied in fact which work against the employers’ interests and terms which work against the employees’ interests. Examples of the former include the duty to pay wages; examples of the latter include the duty to obey reasonable orders.

Employment Law Concentrate

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. Employment Law Concentrate helps to consolidate knowledge in this area of law. This seventh edition includes updates on employment law, including further coverage of the employment status, written particulars, restraint of trade, and equal pay. The book includes discussion of recent cases, including Supreme Court ones, and forthcoming amendments to the law are noted where appropriate. The volume also looks at implied terms, discrimination, parental rights, working time, and types of breach of employment contracts and termination of employment contracts. Finally, the text looks at dismissal issues (including both wrongful and unfair dismissal), redundancy, and trade unions. The chapter on trade unions has been transferred to online-only content, available in the online resources for this book.

5. The legal framework

‘The legal framework’ outlines the key competition provisions currently in the US and EU. Like in most other jurisdictions, EU and US laws include competition provisions that are used to address antitrust violations such as anti-competitive agreements or abuse of monopoly power. They also include laws dealing with proposed mergers and acquisitions. The US Antitrust Law prohibits contracts and agreements between two or more individuals or entities in restraint of trade or commerce. Meanwhile, EU competition law prohibits agreements between ‘undertakings’ that have, as their object or effect, the prevention, restriction, or distortion of competition, and affect trade between the EU member states.

Restrictive covenants, use of land, and the restraint of trade doctrine

The common law doctrine of restraint of trade has a well-established presence in relation to contracts of employment and contracts for the sale of a business. Beyond those specific areas it reared its head from time to time, but the legal test for its applicability was not a model of clarity. Where the covenantor ceded a pre-existing freedom to engage in commercial activity, the decision of the House of Lords in Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269 brought it within the doctrine, but the recent decision of the Supreme Court in Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2020] UKSC 36, on appeal from the Northern Ireland Court of Appeal [2018] NICA 7, has discarded that test in favour of one based on the structure of a trading society. Peninsula Securities was a case concerned with the applicability of the restraint of trade doctrine to covenants affecting the ability of a landowner and its successors in title to use the land in a way that potentially competed with the business of an adjoining occupier. The decision that the restraint of trade doctrine was not engaged in these circumstances was set against the power of the Lands Tribunal to modify or extinguish covenants affecting land under article 5 of the Property (NI) Order 1978.

11. Illegality

Poole’s Casebook on Contract Law provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. A contract may be deemed illegal or void on grounds of public policy. This chapter examines the illegality of contracts under English law, contracts prohibited by statute (express prohibition), and contracts that are illegal in their performance. It considers contracts that are void on grounds of public policy, focusing on contracts in restraint of trade, covenants between employer and employee, exclusive dealing agreements, exclusive service agreements, and severance of the objectionable parts of covenants. The chapter also discusses the recovery of money or property transferred under an illegal contract, along with the UK Law Commission’s proposed reform of the law governing illegal contracts and the Supreme Court decision of Patel v Mirza over controversy concerning the nature of illegality, the basis for intervention in illegal contracts, and the ability to recover under an illegal contract.

11. Illegality

Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. This chapter examines contracts that are tainted by illegality or otherwise contrary to public policy, and how illegality affects the parties’ positions following the hugely influential Supreme Court decision of Patel v Mirza. A contract may be illegal from the beginning or illegality may arise as a result of statute (for example, express statutory prohibitions). Examples of illegal contracts are those intended to commit crimes or contracts prejudicial to sexual morality. As a general principle, illegal contracts cannot be enforced and benefits conferred in the performance of an illegal contract cannot be recovered. There are some exceptions, however, such as where the parties are not in pari delicto (not equally guilty), or where the claimant can establish his right to the money or property transferred without having to rely upon the illegal contract. This chapter also examine the law’s treatment of contracts in restraint of trade, including exclusive dealing and exclusive service agreements.

22. Illegality and restraint of trade

This chapter analyses the law on illegality and restraint of trade. The law on illegality is very complicated. Illegal acts vary greatly in range and severity. The Supreme Court has recently held that a ‘range of factors’ need to be considered when deciding whether the claimant’s illegality should defeat a claim, and it is likely that the law will become increasingly flexible in this area. Restraint of trade is concerned with balancing the competing rights of private parties, notably the employer’s right to expect a certain degree of loyalty as regards their business against the employee’s freedom to leave their employment and to undertake new business activities. The key consideration tends to be whether restraint of trade clauses are reasonable.