Anyone who has watched the movie Fatal Attraction will know how hard it is to get rid of some people.
For instance, you bought a “Brazilian Wax” business and one year later the owner sets up down the road. You sue. You find yourself in court asking for an injunction to close him down.
The “restraint of trade” clause in the contract will not work if it is unreasonable. It has three elements:
1. Distance - Is 50 kilometres a reasonable distance to travel for a Brazilian wax? It is not just a “drop, rip and tear” operation but requires a degree of intimacy that you would not trust to just anyone (depending on the price). The judge might liken it to his tailor. Find examples of other clients who are prepared to travel 50 kilometres to be tortured.
2. Duration - Is five years reasonable? If the vendor was to return to the area and start up a competing business within 5 years would this damage the business that he sold to you? I would say yes, unless he had developed cold hands.
3. Type of business - Brazilian waxing is a very small area of business to restrain. It is difficult to know if the judge would allow you to expand the restriction to legs, backs and chests. Although he would want to protect the goodwill sold to you, top lips may be out of the question.
Such clauses are not a “lay down hand”; you must think carefully about what you need, and don’t ask for the world. Take a careful look at the vendor and decide if he is ready to let go. But if you paid good money, hopefully the judge will produce the right answer.
In one case, a judge adjourned a trial while he took a ride on a bus-his first. If the judge in your case decides to have a “Brazilian”, my advice is, sell tickets.
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For more on restraint of trade listen to Paul on Business Daily Essentials :
If you’re buying a business, be careful of those restraint of business clauses. And take a very good look at the person who is selling the business to you, warns solicitor, Paul Brennan, Principal at Brennans Solicitors. While most sellers are helpful, there is that odd ratbag, who will not go away.