Essay: Common law system restraints of trade

Introduction

The case Bulldogs Rugby League Club & Anor v Williams & Ors gave the situation to the court to consider the contract law under common law system and the Restraints of Trade Act 1976 (NSW). In this analysis, it will identify the relevant issues and ratios based on the relevant facts in this case, and critically analyse the court’s decision.

Facts and Issues

The first defendant, Sonny Bill Williams (“Williams”) had signed up a five years contract with the plaintiff, Bulldogs Rugby League Club Ltd (“Bulldogs”) in 2007. Williams agreed to the clauses included subclause 3.1(t), which is the player restrained participating in any other football match of any code without the prior written consent of the Bulldogs. In July 2008, Williams and the second defendant (Toulon Rugby Club) entered into a contract that Williams would represent this French club to participate the competition for 08/09 season. And Williams played a trial game on 8th August for Toulon in the same year. The plaintiffs sought an injunction prohibiting the first defendant representing Toulon to play.

To determine whether this injunction could get the consent of the court, the major issue for the court to consider is whether the restraint was valid and necessary to protect the interest of those parties whom in favour of these restrictions.

Ratio Decidendi

1. A basic principle is mentioned by the Supreme Court, the sanctity of contract. The party should be enforced to undertake the obligations agreed under the contract.As an employment contract between these plaintiffs and defendants, the obligation of defendant should be enforced.
2. The general rule from Lumley v Wagner is used by the court, if the contract is for the provision of ‘special services’, the promise by contractor that he does not to work for a competitor should be enforceable.
3. The restraint of trade would be reasonable, if it protects the employer’s legitimate interests and is not injurious to the public. This is the central principle applied in this case.

Analysis and Evaluation of the Decisions

To determine whether this restriction is valid, first thing to be considered is whether the employer has the interest need to be protected The restraint must go no further than is necessary to protect that interest of the party. In this case, the court indicated some reasons the plaintiff sought for an injunction: to prevent injury to the player, the importance of promotion of Mr. Williams for the recruitment strategy of plaintiff and the value of “star attraction” created by Mr. Williams for the Bulldogs etc.These terms affected by Mr. Williams are related to the actual interest of the plaintiff.

Another reason to support the reasonableness of this restriction considered by the court is the sanctity of contract. From the principle in Doherty v Allman, the person whom undertakes a considered obligation under the contract should be enforced to carry out the obligation In this case, Mr. William should be enforced to undertake this considered obligation by the contract.

A general rule about “special services” is also used by the court. As the rule states that if the contract involves providing special services, the promise not to work for a competitor will be enforced” Under this situation, Mr. William agreed to present the Bulldogs to participate the rugby competition. This would be the agreement of providing special services. Therefore, the promise for Mr. Williams not to work for a competitor should be enforced. Furthermore, he negotiated with the Bulldogs under the freely and fair circumstance.
So far as this, the bargaining is fair between both parties. From the different aspects of argument above, the plaintiffs have the interest needed to be protected.

Secondly, the court should consider whether this restraint is not injurious to the public. The general rule indicates that every person has the right to trade freely, any trading behaviour interference with individual liberty is contrary to public interest. However, there are some exceptional circumstance exist. In NSW, “restraint of trade is valid to the extent to which it is not against public.” is stated by the s 4(1) of the Restraints of Trade Act 1976(NSW). In the case, the balance of convenience was taken by the court to determine. The bulldogs would keep their promise to continue paying Mr. Williams payment under the contract, which is the obligation the plaintiff need to carry out. Moreover, the defendant had the freedom to earn a living.Even if the injunction is granted, he also has the opportunity to work for the plaintiff as long as the salary is being paid. After analysing these issues, it has figured out that the people had the freedom to order his affairs for his own and public interest.Therefore, the restraint is not injurious to public interest.