Restraint Of Trade Clauses

Summary

Restraint of trade clauses in employment contracts in England are enforceable only if they protect a legitimate business interest and are reasonable in scope and duration. If a clause does not protect a legitimate business interest, it is likely to be unenforceable. In the scenario provided, the clause is likely unenforceable as it does not protect a legitimate business interest. Additionally, Priyas offer to pay university fees is likely an indemnity, as it suggests primary responsibility, while Gadowls agreement to pay the bank if Molly defaults is a guarantee, indicating a secondary obligation.

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Scenario *: Molly is concerned about paying her university fees. Her mother, Priya, offers to pay the fees if Molly has difficulty meeting them. Scenario *: Molly takes out a bank loan for living expenses. Her father, Gadowl, agrees to pay the bank if Molly fails to make any loan repayments. Which ONE of the following is CORRECT? A) Priya’s offer is an indemnity, and Gadowl’s agreement is also an indemnity. B) Priya’s offer is a guarantee, and Gadowl’s agreement is also a guarantee. C) Priya’s offer is likely an indemnity, and Gadowl’s agreement is a guarantee. D) Priya’s offer is not a guarantee, but Gadowl’s agreement is an indemnity.
The correct answer is:
C) Priya’s offer is likely an indemnity, and Gadowl’s agreement is a guarantee.
- Indemnity: Priya's offer to pay the fees if Molly has difficulty suggests she takes primary responsibility.
- Guarantee: Gadowl's agreement to pay the bank if Molly defaults is a secondary obligation, thus a guarantee.
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