A Non-Competitive agreement is a sort of restrictive contracts which binds an employee:

i) To not to impart any proprietary information to the outsiders concerning company or,
ii) To prohibit an employee to facilitate not to compete within a specified period of time after
dismissed from their work with their ex-employer.
For the enforceability of Non-Competitive agreement three requirements need to be fulfilled:
i) There should be a valid interest which the party is protecting via placing the non-competitive
agreement.
ii) The restraint made shall be reasonable and will not be extensive to protect the valid interest.
iii) The restraint made shall not be against the public interest.
The first requirement is that the employer must have a valid interest in the restrained activities of the
dismissed employee, where the employee may have attained the secret of the business or the
customers rely on the judgment and skills of the employee, or the employee had dealt with the
customers of the business exclusively. It was made unambiguous by the House of Lords in the case of
Herbert Morris Ltd v Saxelby that it is not adequate only that the employee may use the skills acquired
during the course of his work in the employers business or compete with his ex-employer.
In case of business sale, the buyer interest would be to safeguard the goodwill of the purchased
business i.e. the existing trade made up by the efforts of the seller. The buyer may have paid excess
amount than the purchase value of the business for the obtaining the benefit from the goodwill. In that
case, the buyer has a legal right to restrain the seller from starting a business in that particular area
since it will magnetize the old customers.
It has been recognized by the courts that the categories are not closed concerning legal interest.
Example, in the case of Greig v Insole, the restriction was made by the cricket authorities on the
professional cricketers, Slade J acknowledged that there may involve public interest that the game of
cricket shall be organized and administered in a proper manner. Rather the facts of the case revealed
that the restraint made was unreasonable. In the case of Eastham v Newcastle United Football Club
Ltd, Wilberforce J was not able to locate the legal interest concerning the restrictions made for
professional footballers on the freedom of transfer. Hence, it looks like that, however the theories
regarding the categories of legal interest are open, but judges are very careful in making a verdict of
new interest.
The restraint made is reasonable or not shall be determined in context of the valid interest which is
protected. There are three factors which need to be considered:
i) The time length of the restrain.
ii) The coverage of geographical area.
iii) The range of the activities restrained.
Regarding coverage of geographical area, Mason v Provident Clothing Co shall be a perfect case to be
preferred, a canvasser was employed in the work of selling clothes in Islington and was restrained to
initiate or enter into the identical business within an area of 25 miles of London. It was concluded in this
case that it is too wide.
Restrain on time length depends on type of the contract made. In many employment contracts, a time
length of 1 or 2 years seen to be quite reasonable, but in case of Fitch v Dewes, the managing clerk of a
solicitors business was restrained lifelong. It was held that a business cannot restrain the activities of
the employee for a time period to protect its business which exceeds reasonably. In case of Beckett
Investment Management Group Ltd v Hall, it was held by the Court of Appeal that the restrain on the
financial adviser of 1 year to initiate his own business was reasonable and also indicated that restrain
for more than the specified year will not be considered.
The restrain on the activities should also be related to the interest which is protected. Hence, an
employer restraining an employee to do an activity which is not related to the protecting interest will be
concluded as unreasonable.
When there are no areas specified in the clause then courts have to think reasonably about the
restriction and will be would be considered as worldwide as held in the case of Littlewoods v Harris,
where the plaintiff was engaged in the mail order business, made a restrain to his employee which
contains his related mail order activities business. It was held that the defendant shall not be allowed to
initiate the mail order business only in UK.
If the restrain of the work would affect the public interest i.e. work conducted by doctor, scientist,
playwright, who work for the benefit of public, then the restrain shall not be considered as valid as held
in the case of Wyatt v Kreglinger and Fernau, where the pension of the plaintiff was made conditional
on the basis of not participating in the trade of wool and was held that the condition made is void in
nature rather there was reasonable agreement between the parties because it is against the public
interest.
In the specified case, Born-Free Pte Ltd was engaged in the business of constructing environmentally
friendly residential projects and in the present situation struggling to survive in the competitive market.
A cost cutting measure of the company was to retrench its staff. Benny, an employee of Born-Free Pte
Ltd, working for a period of 1 year for the company and the management of Born-Free have directed
him to terminate his services. An agreement made between Benny and Born-Free Ltd that:
i) The position of Benny as a sales and marketing manager shall be vacated at a specified date.
ii) Benny will not enter into competition either directly or indirectly with Born-Free Ltd within a
period of 6 months from the date of termination; and
iii) Benny shall not join any construction company which also includes construction companies
expertise in environmentally friendly residential projects, in Singapore or anywhere else
within the specified months.
But Benny initiated a company called Live-Again Pte Ltd who entered into several contracts which
are in competition with Born-Free Pte Ltd.
As compared with the legal principle stated above, following application is made:
i) Born-free Pte Ltd has a valid interest to protect their business because the company was
struggling to survive in the competitive market and employee has also acquired valuable
skills through working in the company.
ii) The time length of restrain is also reasonable i.e. 6 months, as stated in case of Investment
Management Group Ltd v Hall that 1 year shall deemed to be reasonable time period.
iii) Blue pencil rule shall be applied by the court in the case of geographical area covered
because the company has stated in the agreement that Benny shall not join or start
business relating to construction in Singapore or anywhere else. The geographical area is
not reasonable and it needs to be covered only within Singapore (if it was famed within the
country in the past for their work) or that particular town where they have their main place
of business.
iv) The activities which are restrained are also reasonable because it is related to the interest
which is protected by the employer i.e. to survive in the competitive market.
v) The restrain made is not against the public interest.
In case of Gilford Motor Co Ltd v Horne, where there was an agreement between the company and
Mr EB Horne i.e. Managing director of the company, that he would not solicit the companys
customers when he would leave the company. The company fired Horne and he opened a company
called JM Horne & Co Ltd. After wards he solicited the customers of the company by sending out his
fliers saying some soliciting sentence.
The company claimed to the High Court that he is breaching the terms of the contract but High
court refused to enforce the claim made by the claimant.
The company appealed and it was held that injunction needs to be granted on the acts of Hornes
company for the reason of forcing Hornes company to stop their proceedings against the negative
act.
Therefore, the remedy provided in the case of Gilford Motor Co Ltd v Horne shall also be
considered in the given case by the court as a matter of stare decisis i.e. Injunction will be granted.

A person who is authorized to perform certain acts on behalf of other is known as agent of that
person and the person for whom he or she has to perform such acts is known as principal.
For the purpose of constructing an agency relationship, the principal has to disclose to the agent
evidently that he would act on behalf of principal and under the direction and control of principal.
The relationship can be implied with the acts and word of the parties and also with the
circumstances of the case which reveals that there was an intention to create legal relationship
between the parties irrespective of the fact that the relationship has been depicted by the parties
through the use of specific words or other terminology.
There is a fiduciary relationship attached to the agency which arises by clearly stating the consent by
principal to the agent that he would act on behalf of the principal which would subject to the control
of the principal.
Claimant has to prove certain things which are stated below to establish the agency relationship:
1. The principal has made consent to the agent whether expressly or impliedly that he would act
on his behalf.
2. The act should be performed by the agent under the control of principal.
The principal should mean that the acts performed by the agent are for him and agent should act
under the authority provided by the principal.
In the given case, First Class Education Pte Ltd (FCE) is owned by John and the company is the
exclusive licensee of SCORE-WELL which is an educational programme. Score well has three
centres in Singapore.
Derrick, who is a son of John, joined an office of Score well as an Executive manager. Derrick has
used public transport for travelling to office for some days but it was over crowded and he decided
to purchase a motorcycle for the comfort to go to his office.
It was stated by John to Derrick that he has to use the public transport and has to work on his
directions. John also stated that the role of Derrick in that Score Well centre is as a sales and
marketing of score well and he will not be allowed to sign any agreement on behalf of the
Company FCE.
In the same time, Derrick visited a showroom to purchase a model of motorcycle where he met
Harvey and Derricks friend directed Harvey that Derrick is the Executive manager of Score well.
Harvey was surprised with the statement and responded that his son had moved to the Score well
centre in Jurong which was full of student.
Derrick said he came here to buy a company vehicle with which he will go to his office. Derrick
purchased a model of motorcycle which was advised by Harvey and deposited an amount of S$2000
and a contract was signed on companys behalf.