Are restraint of trade clause enforceable in Singapore? Generally, restraint of trade clauses are considered as being contrary to public policy and hence unenforceable unless there is a reasonable legitimate interest to be protected. As such, if a contract has a restraint of trade clause which cannot be legitimately justified, then the contract will be deemed void to the extent that the restraint clause cannot be severed from the contract. The Singapore Court of Appeal in CLAAS Medical Centre Pte Ltd v Ng Boon Ching [2010] SCGA 3 explained that “all covenants in restraint of trade are prima facie void. However, they can be held to be valid if the party seeking to rely on the restructive covenant can show that, firstly, the clause concerned is reasonable in the interest of the public. Additionally, there must be a legitimate proprietary interest to be protected. As was held in Man Financial, the Court will only enforce the covenant if it goes no further than necessary to protect the legitimate interest. There cannot be a bare and blatant restriction of the freedom to trade … Moreover, even where a legitimate proprietary interest is shown, the court will ensure that the covenant in restraint of trade goes no further than what is necessary to protect the interest concerned”.
Posted on: Fri, 09 Aug 2013 00:57:25 +0000
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