Notes on Recent Cases.

203

CONTRACT—COVENANT IN RESTRAINT OF TRADE.

Fitch v. Dewes. [1921] 2 A. C. 158.

ACTION brought by a solicitor practising at Tamworth to restrain
appellant from practising as a solicitor in breach of an agreement of
service between respondent and appellant.
Fitch agreed with Dewes that he would not practise alone or with any
other persons as a solicitor within a seven-mile radius from the Town
Hall at Tamworth. The breach of the agreement was admitted and the
sole question for determination was whether in the circumstances of the
case the agreement was unenforceable by reason of its being in unreason-
able restraint of trade.
In Morris v. Saxelby [1916] 1 A. C. 688, it was decided that an agree-
ment made between an employer and employee, the employee covenanting
not at any time during a period of seven years from leaving the employ-
ment to carry on directly or indirectly either in the United Kingdom of
Great Britain or Ireland the sale or manufacture of certain specified
articles, the manufacture of which constituted the business of the
employer, ivas void. Lord Atkinson said, " This agreement is not, having
regard to all the circumstances in the case, reasonable in reference to the
respective interests of the parties concerned, and is prejudicial to the
interests of the public."
The cases, Attwood v. Lamont [1920] 3 K. B. 571, and Bowler and
Blake v. Loveyrove (reported iij [1921] 1 Ch. 642)) should also be noted. In
the former (a case of a tailor's cutter), as regards the reasonableness of a
covenant, it was said that the burden of proof as to reasonableness lies
on the party benefiting; a master is not entitled to protect himself from
the competition per se of a former servant; nor can the servant be pre-
vented from using his own skill and knowledge, which he may to a very
large extent have obtained during the course of his employment. In the
latter case (that of an auctioneer's clerk) it is clear that, if there is any
real fear that the servant can injure the late master by misuse of his
acquaintance with customers, or his knowledge of trade secrets, or that
the master's trade connexion would be unduly invaded by reason of any
special opportunities the servant might have acquired while in his employ-
ment, a covenant so restricting him will not be deemed unreasonable.
In view of the decided cases quoted above, it is quite clear on what
principle cases dealing with restraint of trade should be dealt with. The
decision, therefore, in Fitch v. Dewes is on all fours with the other
decisions, namely, that if the opportunities given to the servant have
been of an unusually intimate kind and have enabled him to get close
personal contact with his master's clients, then a covenant which in a less
confidential class of occupation would be unreasonable may be reasonable.
In Fitch v. Dewes the servant's opportunities were of an exceptional kind.
In point of fact he had in one year interviewed more than 50 per cent, of
the clients. Lord Birkenhead, L.C., in his judgment said: "Indeed, I
am of opinion that it is in the public interest that a proper restrictive
agreement of this kind between an established solicitor, possibly an
elderly man, and a younger man should be allowed. It is in the public
interest because otherwise solicitors carrying on their business without a
partner would be extremely chary of admitting competent young men to
204 The Cambridge Law Journal.
their offices. There is, therefore, nothing in the clause which I have read
which conflicts with public interest, unless it exceeds what is necessary
for the protection of the covenantee, in which case the excess itself would
be against public interest." The learned lord then pointed out that it is
quite consistent with public policy to make such a covenant (restricted to
a small area in space—only a radius of seven miles) unlimited in respect
of time.
The conclusions to be drawn from the cases quoted are these:—
(1) It is unreasonable to restrict a person's competition per se. Such
skill acquired during apprenticeship is obviously intended by the
very nature of such apprenticeship to be used to the fullest advan-
tage. Special trade secrets are, of course, an exception to this rule.
(Morris v. Saxelby.)
(2) The burden of proving the reasonableness of the covenant lies on
the party benefiting by the covenant; the covenant must be reason-
able, not merely from the point of view of both the parties, but
also of the general public. (Attwood v. Lamont.)
(3) If there is any real fear that the servant will, or can, injure his
late master by misuse of his acquaintance with his customers, or
of his knowledge of trade secrets, or that the master's trade con-
nexion would be unduly invaded by reason of any special oppor-
tunities the servant might have acquired while in his employment, a
covenant so restricting him will not be deemed unreasonable.
(Bowler and Blake v. Lovegrove.)
(4) A covenant which is reasonably limited in its operative sphere as
regards space, and yet unlimited in time, and which is of such a
nature that the restraint is only on the use of what may be called
personal and confidential advantages, is not in restraint of trade.
(Fitch v. Dewes.)
H. M. A.

CONTEACT—FlBE INSURANCE—TEUE ANSWEE.

Condogianis v. Guardian Assurance Co., Lim. [1921] 37 T. L. R. 685.

THIS was a claim for a declaration that under a policy of insurance of
the defendant company, dated March 1, 1918, that company was liable
to pay to the plaintiff the loss sustained in consequence of a fire which
occurred on April 17 of that year, and by which a large part of the pro-
perty insured was destroyed.
On appeal to the Judicial Committee of the Privy Council the respon-
dents relied on several defences. The defence on which the case turned
was that among the questions in the fire insurance proposal under con-
sideration there was the following :—" Has proponent ever been a claimant
on a Fire Insurance Company in respect of the property now proposed,
or any other property? If so, state when, and name of company."
To this the answer was given : " Yes, 1917. Ocean." This was literally
true, i.e., it was true that the proposer had in the year 1917 made a claim
against the Ocean Company in respect of the burning of a motor car.
He omitted, however, to state what was also the fact, namely, that in the