Overview
IntroductionA contract in simple terms is an agreement between two or more parties creating obligations that are enforceable or otherwise recognisable at law. It is a promise or a set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognises as a duty.
In commercial contracts such as employment contracts and relations, contracts in restraint of trade and confidentiality clauses are common features of same, whereby employers often adopt restraint of trade clauses in employment contracts to limit an employees ability to engage in competitive trade/ employment activities against the employers trade or business, whilst confidentiality clauses in employment contracts are mostly deployed to protect an employer’s sensitive information, trade secrets, tools of competitive advantage etc from disclosure. A contract in restraint of trade is one in which a party covenants to restrict his future liberty to exercise his trade, business or profession in such a manner and with such persons as he chooses.
However, contract in restraint of trade clauses are often subjected to critical scrutiny by Courts before they can be declared as enforceable, as these clauses must pass the reasonability test, in the sense that they must be seen to be reasonable in scope, geographic reach, and duration, whilst also not being too unjustly restrictive of an employee’s ability to work or trade. This article explores the applicability of these clauses and the legal principle governing them as considered by the Court in the National Industrial Court of Nigeria’s decision in Halogen Security Company Ltd v Nnamdi Melie delivered on December 16, 2024.
