Description
HIGHER EDUCATION PROGRAMMES
Academic Year 2023: July – December
Summative Assessment 2: Commercial Law 2 (HLWC230-1)
NQF Level, Credits: 6, 14
Weighting: 10%
Assessment Type: Research Assignment
Educator: TBA
Examiner: Shanay Minnaar
Due Date: 10 November 2023
Total: 20 Marks
Instructions
- Summative Assessment 2 (SA 2) must be handed in online before or on the day of the Summative Assessment 1 (SA 1) sitting.
- The essay must be a minimum of 600 (six hundred) words, and should not exceed 750 (seven hundred and fifty) words.
- The essay structure must be as follows:
- Cover Page:
- Introduction: Tells the reader what the essay is about.
- Body / Main Content: Is based on research and relates to the essay question or topic that has been set.
- Conclusion: Is a summary of what has been covered in the essay, it must also include suggestions/recommendations.
- Reference list: (not included in the word count): the Harvard Referencing
Read the fictitious scenario below and answer the question that follows:
Wow Factor Models (Pty) Ltd. and Exclusive Models (Pty) Ltd. are competitors as they are both in the business of managing models in Cape Town (the Cape Metropolitan Area). The two companies, amongst other things find prospective models, acts as agents for models, and negotiates work for models. In February 2019, Lethandi was employed by Wow Factor Models (Pty) Ltd. and in May 2021 she was promoted to ‘senior model booker’. The job of a senior model booker includes managing the relationships and interactions between models and their clients by, inter alia arranging photoshoots and negotiating the models’ payments.
In May 2021, Lethandi signed a new employment contract to secure her promotion as senior model booker. The new employment contains a paragraph titled ’10. Special Terms’ under which Clause 10.1 to 13 is a restraint of trade clause, in terms of which
Lethandi undertakes to:
- Not disclose confidential information to any person whatsoever.
- Nor to use confidential information for her own or anyone else’s benefit, unless and until, and then only to the extent the confidential information becomes public knowledge, through no fault of her own.
- For a period of one (1) year after the termination of her employment with the Company (Wow Factor (Pty) Ltd.) for any reason whatsoever, she will not, either for her own account or an Employee, be a representative for anyone else or;
- Not to carry on or be engaged, interested or concerned, whether financially or otherwise and whether directly or indirectly in any business carried on at the date on which she ceases to employed by any Company or any person who operates in competition with the Company (Wow Factor (Pty) Ltd.) anywhere in the Republic of South Africa, unless agreed to in writing by the Company.
- Not to solicit business or canvass any person who was a customer of the Company (Wow Factor (Pty) Ltd.) at any time during her employment with the Company.
- Shall not directly or indirectly offer employment or caused to be employed any person who was at any time within one (1) year immediately preceding the termination of her employment, employed by the Company (Wow Factor (Pty) Ltd.).
Lethandi terminates her employment with (Wow Factor (Pty) Ltd.) in March 2023 and takes up employment with Exclusive Models (Pty) Ltd. in April 2023.
Lethandi agrees that she signed the employment contract, containing the restraint of trade clause with Wow Factor (Pty) Ltd. She argues that Exclusive Models (Pty) Ltd. would probably not have offered her employment if she refused to sign the employment contract, containing the restraint of trade clause.
Wow Factor (Pty) Ltd. wants to approach a court for an urgent interdict to enforce the restraint of trade clause and to prevent Lethandi from continuing to work for Exclusive Models (Pty) Ltd. during the restraint period. Required: (20 marks)
Determine and discuss the constitutionality and fairness of a restraint of trade clause in an employment contract by making reference to relevant sections of the Constitution of the Republic of South Africa, 1996 as well as case law.
Note to student:
Briefly advise both Lethandi and Exclusive Models (Pty) Ltd. on the fairness of the employment contract between Lethandi and Wow Factor (Pty) Ltd. In your discussion, define the following terms (a) sanctity of contract, (b) good faith in contract and (c) fairness and the rule of public policy in contract.
In your discussion, include an introduction, body and conclusion.
Compulsory sources to peruse:
– Calitz, K. 2011. Restraint of trade agreements in employment contracts: time for Pacta Sunt Servanda to bow out? Stellenbosch Law Review 22(1):50-70. Retrieved from https://scholar.sun.ac.za/handle/10019.1/104017 [Accessed 30 April 2023].
– Zero Model Management (Pty) Ltd v Barnard and Another [2009] ZAWCHC 232(18 December 2009) Retrieved from http://www.saflii.org/za/cases/ZAWCHC/2009/232.pdf [Accessed 28 April 2023].
– Labour Guide. The restraint of trade argument rolls on… [Website] Retrieved from https://labourguide.co.za/general/the-restraint-of-trade-argument-rolls-on/[Accessed 28 April 2023].
Additional sources to peruse:
– Sirchia, G. 2017. An analysis of the fairness and constitutionality of restraint of trade covenants in employment contracts and their effect in the market place.
Unpublished master’s thesis. Pretoria: University of Pretoria. Retrieved from https://repository.up.ac.za/bitstream/handle/2263/65727/Sirchia_Analysis_2017.pdf?sequence=1&isAllowed=y [Accessed 30 April 2023].
– Planet Fitness (PTY) Ltd v Buirski and Another ZALCJHB 309 (08 November 2022)Retrieved from http://www.saflii.org/za/cases/ZALCJHB/2022/309.pdf[Accessed 30 April 2023].
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