EFFECT OF AGREEMENT.

New Zealand Herald, Volume LXV, Issue 19892, 10 March 1928, Page 13

EFFECT OF AGREEMENT.

MILK SUPPLIER'S CLAIM.

EX-EMPLOYEE IN BUSINESS. A QUESTION OF CUSTOMERS. Much of interest to city and suburban tradesmen was contained in the result of an unusual civil case concluded in the Magistrate's Court yesterday, when Mr. E. C. Cutten, S.M., gave judgment in a dispute between two' dairymen. Christopher M. Peck, Auckland, sued Charles E. Mills, of Mangere, for £l2O. "The defendant was in plaintiff's employment as a-milk roundsman for a number of years," the magistrate said. "On entering plaintiff's employment he signed an agreement in these words: 'I agree that I will not, on leaving the employment of C- M. Peck, canvass any of his customers. Defendant left plaintiff's employment in March, 1927. Last December defendant and his wife commenced business as milk vendors in the vicinity of the milk round in which he had been employed by plaintiff in the previous March, and ho did in fact canvass some of plaintiff's customers. Defendant says the agreement upon which plaintiff relies is an unreasonable restraint of trade and is illegal. "The chief grounds upon which defendant bases his contention are that the •restrictions are not limited in time or area. Prima, facie all covenants in restraint of trade entered into by an employee with an employer are illegal, but it* may be shown that such a covenant is i necessary for the protection of the employer and is reasonable from the point of view of the employee and the public. The test is whether any fair-minded employer engaged in the particulai class of business would refuse to engage the employee without such a covenant. It would seem that in the business of milk vending such a covenant is regarded as reasonable so long as it is strictly limited to what is necessary for the protection of the employer. "The award of the Arbitration Court recognises the necessity and it contains a form of agreement. The agreement in this case is not in the form set out in the award. That* form limits - the application of the agreement to the two last milk rounds in which the employee has been employed and limits it in time to one year. The agreement here has no such limitations. It applies to the whole of plaintiff's business, and may refer to milk rounds in which defendant has not been employed by plaintiff. He could not know plaintiff's customers in these areas avid there is no good reason for the restraint with regard to them. Further, there is no limitation of time. " It would not be a reasonable thing to restrain defendant for all time from entering into a business or employment in the areas involved which might lead to a breach of this agreement. Ido not, therefore, think plaintiff has discharged the onus of showing that this agreement is both necessary for his protection and reasonable from the point of view of defendant and public, and the agreement cannot be upheld. Judgment for defendant."