Understanding Contract Law: Frustration, Exemptions, and Privity, Summaries of Law

Download Understanding Contract Law: Frustration, Exemptions, and Privity and more Summaries Law in PDF only on Docsity! Page 1 of 16 LEVEL 6 - UNIT 2 – LAW OF CONTRACT SUGGESTED ANSWERS - JUNE 2016 Note to Candidates and Tutors: The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the June 2016 examinations. The suggested answers set out a response that a good (merit/distinction) candidate would have provided. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners’ reports which provide feedback on student performance in the examination. SECTION A Question 1(a) A contract is said to be discharged through frustration if a supervening (i.e. unforeseen) event occurs after the contract was made, which was the fault of neither party and which makes performance of the contract impossible or radically different from that envisaged by the parties. It is the least common way in which contracts may come to be discharged. The doctrine, as initially developed in Taylor v Caldwell (1863) was said to be based upon the court giving effect to an implied term, based upon what a reasonable bystander would have thought the parties would have agreed had they anticipated the unexpected event. However, the modern view is that the courts are, in reality, acting independently to relieve the parties of their obligations under a contract which, without the fault of either side, has become impossible to perform or radically different e.g. National Carriers Ltd v Panalpina (Northern) Ltd (1981). The doctrine will not apply if the parties have made express provision in the contract for the consequences of the unforeseen event (force majeure). Nor will it apply if the party in breach might have avoided the problem, so that the failure to perform could be described as ‘self-induced’ e.g. The Super Servant Two (1990). Most importantly, the contract must have become impossible to perform following the unexpected event, or the performance would be radically different from that first envisaged by the parties. This test sets a high threshold. Thus there will be no frustration if the supervening event has simply made the contract more expensive or difficult for one party to perform (e.g. Davis v Fareham (1956)), or if a significant part of the contract survives the frustrating event (e.g. Herne Bay Steamboat Co v Hutton (1903)). Page 2 of 16 The list of potentially frustrating events is not closed, because it is the effect of the event that determines whether the contract is frustrated, rather than the nature of the event itself. The following incidents have been found to give rise to a frustration in appropriate circumstances: the sustained non-availability of a person whose services are vital to the contract for much of the contract period (e.g. Morgan v Manser (1947)), very substantial delays (e.g. Jackson v Union Marine Insurance Co Ltd (1874)), government intervention (e.g. Metropolitan Water Board v Dick Kerr & Co (1918)), illegality (e.g. Fibrosa v Fairbairn Lawson (1943)) and the cancellation of an event which represents the very foundation of the contract (e.g. Krell v Henry (1903)). 1(b) The discharge of the contract by frustration meant that, at common law, the parties were relieved of obligations falling due after the frustrating event, but not those before it, which still had to be met. This caused arbitrary and unfair results depending upon how the parties had structured their obligations under the contract. Thus, in Krell v Henry, the hirer of a flat in Pall Mall, the purpose of which was to view the king’s coronation procession, lost the £25 deposit payable upon booking, but was relieved of the obligation to pay the £50 balance due two days before the event, following its cancellation. In Chandler v Webster (1904), however, the hirer lost his entire booking fee of £141 in identical circumstances, as this sum had been payable up-front. In both cases, neither plaintiff had received anything in return for the money paid. The position was improved to some extent by the House of Lords in the Fibrosa case, where it was held that the paying party could recover any pre-frustration payment if there had been a total failure of consideration i.e. s/he had received absolutely no benefit in return for the money paid. However, Fibrosa did not prevent unfairness to persons who had received a pre-frustration contractual benefit that was less valuable than the deposit paid, nor did it prevent unfairness to deposit-takers who had provided no benefit, but who had already incurred expenses preparing to perform the contract at the time of frustration. The position was reformed by the Law Reform (Frustrated Contracts) Act 1943, except in relation to certain categories of contracts, such as those for the sale of specific goods (s.2(5)) and instances where the parties have agreed express terms relating to the effect of a frustrating event (s.2(3)). The two most important provisions are sections 1(2) and (3). According to s.1(2), sums paid/payable before the frustrating event can be recovered/cease to be payable. However if the other party has incurred expenses towards the performance of the contract before the frustrating event, s/he can recover a ‘just and equitable’ contribution, not exceeding the sum already paid/payable. In Gamerco v ICM/Fair Warning (1995) it was held that the court has a very broad discretion in deciding how much (if anything) this contribution should be. Section 1(2) is potentially problematic, because if no money was paid/payable before the frustrating event, the part-performer will not be able to recover any expenses. Similarly, if a deposit was paid/payable, the part-performer will not be able to recover expenses incurred in excess of the deposit. Section 1(3), however, provides that if one party has received a ‘valuable benefit’ (other than money) due to the part-performance of the other before the frustrating event, a ‘just sum’ can be claimed by the party providing the benefit, up to the value of the benefit received. The figure can be adjusted to take account of various factors including the value of the benefit after the frustrating event. Controversially, Goff J in BP v Hunt (No.2) (1979) (as subsequently Page 5 of 16 so as to meet their strict obligations under the contract and helps to ensure that any ‘chain’ of subsequent supply contracts will be fulfilled. Question 3 Exemptions of liability are contract terms which attempt to allow one of the parties to avoid legal responsibility (either wholly or partly) for a breach of contract. Many business contracts are negotiated by parties of equivalent bargaining strength who have sufficient resources to access legal advice during negotiations. In these cases, one business’s agreement to submit to an exemption is often a legitimate way of allocating the risks between the parties e.g. so as to allow for price reductions or negotiation over other terms, and as a basis to take out insurance to cover potential losses. A need for protection may arise where a disparity of bargaining strength allows a large business to impose its standard terms on a small business: the latter may not understand the consequences of the agreement, and may have insufficient bargaining power to influence the terms. Both common law and statute provide ways of challenging the unfair use of exemptions of liability where a large business is in breach of contract. Common law controls: rule of incorporation Businesses in breach of contract can only rely on exemption clauses if the other party was given reasonable notice of the existence of the term(s) before or at the time of the contract. In most cases, this does not require the contract breaker to have provided actual notice of the exemption, for example by ensuring that it has been read, unless the clause was unusual or onerous in relation to the type of contract being made e.g. Interfoto v Stiletto(1988). There will be reasonable notice, and hence incorporation, if the innocent party signed a document containing, or referring to further written terms including the exemption (L’Estrange v Graucob (1934)), unless the party in breach misrepresented the effect of the clause to the innocent party (Curtis v Chemical Cleaning & Dyeing Co (1951). Reasonable notice may also be given by providing the innocent party with a contractual document, such as an invoice, referring to the exemption prior to or at the time of the contract (Parker v South Eastern Railway (1877)). Reasonable notice may also be provided through a significant, consistent course of previous dealings between the parties e.g. Petrotrade Inc v Texaco Ltd (2000). The rule of incorporation may be of limited practical benefit to small businesses, given that well-advised large businesses are likely to put in place procedures to ensure their standard terms are appropriately communicated before trade occurs. Common law controls: rule of construction An exemption clause must be worded clearly enough to cover the circumstances of the breach: any uncertainty as to the meaning of the clause will usually be interpreted against the party in breach (the contra proferentem rule) e.g. Andrews v Singer (1934). The rule is often more strictly applied where a business attempts to exempt negligence liability. Very clear wording (i.e. ‘negligence’ or equivalent) is usually needed to prevent application of the contra proferentem rule, as these clauses are very onerous e.g. Stent v Gleeson (2000). Page 6 of 16 In theory, the rule of construction encourages businesses to draft contracts carefully so that it is clear from the outset which party bears the risks. In practice the rule may be of limited benefit to small businesses who have been forced to submit to onerous terms which were clearly drafted by a large business’s lawyers. The Unfair Contract Terms Act 1977 (UCTA 1977) In view of the inadequacy of the common law ‘weapons’, comprehensive legislative protection was required. UCTA 1977 applies to businesses (s.1(3)) who attempt to exclude or restrict liability e.g. in relation to either the ‘victim’s’ rights or remedies, or by making liability or its enforcement subject to restrictive or onerous conditions – s.13. Section 2 prevents businesses from exempting negligence liability resulting in death and personal injury. Attempts to exempt liability for other types of loss resulting from negligence are void unless the party in breach can satisfy the ‘reasonableness’ test – s.2(2). Under sections 6 and 7 businesses cannot exempt liability for the statutory implied promise as to legal ownership in relation to different types of contracts under which goods pass. Breach of other statutory implied terms relating to the description of goods, their quality, fitness for purpose and sample sale will be void unless the defaulting party can satisfy the ‘reasonableness’ test. Section 3 most frequently applies to a business’s attempt to exempt liability for breach of its own express written standard terms. Any exemption of liability must satisfy the reasonableness test and must not allow the contract-breaker to render a substantially different performance from that promised/no performance at all. Where an exemption is subject to a test of reasonableness, the onus is on the contract-breaker to prove the clause was reasonable at the time the contract was made (s.11(1)). Schedule 2 of the Act lists criteria to be considered in determining the issue of reasonableness. These are applicable whether the exemption falls under sections 6,2 or 3 - Stewart Gill Ltd v Horatio Myer (1992). These include the ‘discoverability’ of the exemption and the relative strength of the bargaining positions of the parties. An exemption forced upon a weaker party by a stronger party is more likely to be regarded as unreasonable. In Watford Electronics v Sanderson (2001) exclusions in the defendant’s standard contract were found to be reasonable as the negotiations had been handled by experienced businessmen representing substantial companies of equal bargaining power. The Court of Appeal made the point that contracting businesses are usually in the best position to assess the commercial fairness of their agreements. A clause will only be found to be void as unreasonable if there is evidence that one party took unfair advantage of the other, or the term was so unreasonable that it could not have been properly understood/considered by the innocent party. Thus small businesses are far better protected by UCTA 1977 from unfairly imposed exemptions of liability than they are under the common law. However, such protection may be undermined by unwillingness to challenge abuses for fear of prejudicing future business relations, or ignorance resulting from a lack of access to legal advice. Nor does UCTA 1977 protect small business from unfair terms other than exemption clauses, a point outlined by the Law Commission in its 2005 report on ‘Unfair Terms in Contracts’. Page 7 of 16 Question 4 The question concerns the doctrine of privity of contract. This is the principle that the only persons who can sue and be sued under a contract are the parties to it. Thus the doctrine may operate to prevent third parties from acquiring benefits under contracts to which they were not party. The doctrine originates from the decision in Tweddle v Atkinson (1861) (as subsequently affirmed by the House of Lords in Dunlop Pneumatic Tyre Co v Selfridge & Co (1915)) and is closely related to the requirement for consideration. The court decided that William Tweddle was unable to enforce a mutual promise made in a written contract between his father and father-in-law that each would pay him a sum of money, even though the contract stated that William was entitled to sue. This was because William had provided no consideration to ‘buy’ his father-in-law’s promise to pay him a lump sum. Whilst the principle legitimately prevents contracting parties from imposing liability on unsuspecting third parties, it has clear potential to cause unfairness and to frustrate the express intentions of the parties in relation to the conferring of benefits. For example, a promise made by the purchaser of a business in Beswick v Beswick (1968) to pay a weekly sum to the deceased vendor’s wife would not have been enforceable by the wife in her capacity as a third party beneficiary. Fortuitously, the wife was able to enforce the promise by obtaining an order for specific performance in her capacity as the personal representative of her late husband’s estate. The rule also gave rise to commercial inconvenience because it meant that employers could not easily confer the benefit of exemption clauses upon third party contractors undertaking work on their behalf e.g. Scruttons v Midland Silicones (1962), though a partial solution to this problem was developed by the Privy Council in The Eurymedon (1975). To mitigate the problems associated with the privity rule, the common law and statute developed a number of exceptions/methods of avoiding the doctrine. The most significant means of avoidance at common law is the possibility of bringing an alternative claim in the tort of negligence. Here, an ‘ultimate consumer’ who has suffered loss due to a dangerously defective product may have a limited remedy against the manufacturer, even though there was no contractual relationship with the supplier: Donoghue v Stevenson (1932). Liability has been extended, in limited circumstances, to protect third parties from economic loss resulting from the negligent provision of professional services e.g. White v Jones (1995). The rather unpredictable and artificial device of enforcing promises by recognising the existence of a ‘collateral contract’ between the promisor and a third party has sometimes been used to enforce assurances made by manufacturers (e.g. Shanklin Pier v Detel Products (1951)) and dealers of goods subsequently supplied on hire-purchase (e.g. Andrews v Hopkinson (1957)). In limited circumstances, claims for damages on behalf of third parties have been recognised. In Jackson v Horizon Holidays (1975) the claimant recovered an enhanced sum of damages for distress and disappointment following a disastrous family holiday resulting from the travel agent’s breach of contract. The Court of Appeal held that Mr Jackson had not acted as trustee for his family but had entered the contract on their behalf. Lord Denning MR approved Lush LJ’s statement in Lloyds v Harper (1880) that, where a contract was made for the Page 10 of 16 If Chen rejects the car, his losses may include any increased fuel costs between purchase and rejection, and reasonable out-of-pocket expenses associated with Chen’s attempts to get the car repaired and its subsequent rejection (the cost of repairs were presumably met by the dealership/Zondagen). If Chen retains the vehicle, the dealership may be liable to pay road tax, low-emission zone charges and increased fuel costs over the period he is likely to retain the vehicle from the date of purchase, as well as any out-of-pocket expenses (as above). Chen would also appear to be entitled to the difference in value between the Cesia as advertised, and a vehicle which has the same, lower fuel efficiency. This may be a significant sum given the premium Chen paid for the ‘clean diesel’ car. Misrepresentation: rights and remedies Amina’s statements concerning the Cesia’s low emissions and fuel efficiency probably also gave rise to a misrepresentation. By passing on Zondagen’s data, it is likely that Amina will be seen as having adopted the claims as her own (e.g. Webster v Liddington (2014)), unless she issued a disclaimer e.g. by telling Chen that she had could not confirm the details herself. Both statements are factual, and the low emissions claims were false. It is unclear whether the fuel-efficiency figures were initially false, or whether these became so following the remedial work (i.e. the filter fitting). Either way, it is arguable that fuel-efficiency ratings which cannot be achieved unless emissions are artificially suppressed during lab tests are nonetheless false and misleading from the outset. Chen appears to have relied on both statements when entering into the contract given his wish to avoid road taxes and to achieve fuel-efficiency (Museprime v Adhill (1990)). If Amina adopted Zondagen’s information as her own, she will take on the same responsibility as the manufacturer who made the original claims (e.g. Webster). Thus she may be liable for a fraudulent misrepresentation i.e. one the statement-maker knows or believes to be untrue - Derry v Peek (1889). However, in practical terms, it may be easier to establish a negligent misrepresentation here. Once Chen has established his reliance on Amina’s false statement(s) of fact, it would then fall to Amina to prove that she not only made the statement innocently, but also had reasonable grounds to believe it was true - s.2(1) MRA 1967. This will be impossible given Zondagen’s falsification of the data using the ‘defeat’ device. Chen’s right to rescind the contract may be affected by affirmation i.e. his agreement to its repair after discovering the fraud and the continued use of the vehicle (Long v Lloyd (1958)). He will, however, be able to recover full compensation for all losses, whether or not foreseeable as a result of entering into the contract - Doyle v Olby Ironmongers (1969); Royscot v Rogerson (1991). On the facts, these are unlikely to differ substantially from Chen’s damages entitlement resulting from breach of contract. Question 2 Fahim will only be bound to purchase the PCs from Theta Computer Systems if a legally binding contract has come into existence. This requires an agreement between the parties consisting of an offer and an acceptance. An offer may be defined as a clear expression of willingness to enter into a contract on certain terms, with the intention that they will become legally binding on the person making the offer (the offeror) if accepted by the person to whom the offer is made (the offeree). The presence of an offer (and acceptance) is determined objectively, in other words, it is a question of what a reasonable onlooker would have thought according to everything that was said and done, Page 11 of 16 rather than what the parties may have subjectively intended – Storer v Manchester City Council (1974). An acceptance is a final, unqualified assent to all the terms of the offer. 3 May The document presented to Fahim by Jennifer on 3 May appears to contain an offer. It is a clear expression of willingness on the part of Theta Computer Systems to enter into a contract with Fahim on specific terms: the quote details specific goods at a specific price. 12 May The status of Fahim’s reply must be determined. It is not an acceptance because Fahim does not agree to all Theta’s proposed terms i.e. the price. A counter offer occurs where the offeree attempts to vary the terms of the offer, or to introduce new terms i.e. it is a firm counter proposal by the offeree to enter into a contract on terms which do not exactly match those originally proposed by the offeror e.g. Hyde v Wrench (1840). However, if the offeree simply requests further information before deciding whether to accept an offer, or attempts to find out whether the offeror might be prepared to vary her terms, this is unlikely to be regarded as a firm rejection of the original offer - Stevenson v McLean (1880). Fahim’s letter, stating that he would only be prepared to pay £5,000 for the computer system appears, on balance, to be a firm counter-proposal to pay a specified, albeit lower price for stated goods. If so, Fahim will have made a counter-offer, effective when the content of the letter is eventually communicated to Jennifer on 19 May – Taylor v Laird (1856); Williams v Carwardine (1833). In the unlikely event that Fahim’s letter were only regarded as a request for information, no contract would come into existence with Theta as this would mean that Jennifer’s letter of 19 May would amount to nothing more than an offer. Events between 12 and 19 May It seems clear that Fahim’s telephone exchange in the meantime with Omikron Workstations amounts to the acceptance of an offer to supply an equivalent computer system for £5,200. Thus, Fahim will be liable under two separate contracts if he also enters into a legally binding agreement with Theta. 19 May Assuming the notification of Fahim’s letter to Jennifer involves the making of an offer, the next issue is whether Fahim’s email amounts to a valid revocation of this offer. An offer can be validly withdrawn provided the withdrawal is unequivocal and communicated before acceptance takes place, either directly (Byrne & Co. v Van Tienhoven & Co (1880)) or via a reliable third party (Dickinson v Dodds (1876)). The business context of the communication raises the question as to when Fahim’s attempt to revoke his offer by email will be treated as having been communicated to Theta: the email is likely to have been available for Jennifer to retrieve from her inbox at 1 pm, yet due to pressures of work, Jennifer did not read the email until 4 pm. Page 12 of 16 The Court of Appeal in The Brimnes (1975) considered that notices sent to a business (in this case by telex) should be treated as having been communicated when they ought to have come to the attention of an appropriate member of staff who was acting in a normal and competent business-like manner, in other words, when the sender might reasonably expect the message to be read. Messages transmitted by instantaneous means during ordinary business hours would normally be regarded as having been communicated upon receipt. Such an approach was supported by Lord Fraser in Brinkibon v Stahag Stahl und Stahlwarenhandelsgesellschaft (1983). He observed the general rule that telexed acceptances are effective when received on the recipient’s machine was justified because once a message is received, it is the offeror’s responsibility to arrange for prompt handling of messages within the office. In other words, if a message is received during normal business hours, it is the offeror’s fault if the message is not read very soon after it arrives. According to these principles, it is arguable that the content of the email will be deemed to have been communicated to Jennifer when the message was available for retrieval at 1 pm, and thus Fahim’s offer was withdrawn prior to acceptance. Support for this conclusion may also be drawn from Reg 11 Electronic Commerce (EC Directive) Regulations 2000 which provides that website orders are communicated once accessible, though the provision does not specifically apply to contracts concluded by individual email exchanges. Alternatively, Theta may argue that a reasonable person would not expect an email message sent at the start of the lunchtime period to be read until later during the afternoon, especially if Theta is a small business organisation with limited personnel (the Brimnes). If so, Fahim’s attempt to withdraw may fail if Theta’s acceptance occurs before notification of the email. Provided the letter of acceptance is correctly stamped and addressed, its content will be deemed to have been communicated to Fahim when it is placed in the control of the postal service (Adams v Lindsell (1818)) at 2 pm. The postal rule would appear to apply here because it would not have been unreasonable for Theta to accept by post given that Fahim’s counter-offer was made the same way (Henthorn v Fraser (1892)). Thus if the email is deemed to have been communicated after 2 pm there will be a contract between the parties. Question 3(a) There can be no doubt that a legally binding contract came into existence between Wayne and Terry in October 2015 in which all the requirements of offer, acceptance, consideration and intention to create legal relations were present. Although Wayne is personally acquainted with Terry, the contract is commercial in character as substantial construction work is being undertaken for a significant price. There will be a strong presumption that the parties intended to create legal relations, or at the very least a displacement of the presumption of lack of intent for agreements made in a social setting (e.g. Merritt v Merritt (1970)). The main issue here is whether Wayne’s agreement to pay Terry a further £10,000 for additional labour and materials amounts to a variation of their existing contract. Such a variation will only be valid if it is supported by sufficient consideration from Terry. Stilk v Myrick (1809) establishes the basic common law principle that a promise to pay more for goods and/or services already due under an existing contract cannot be enforced unless the supplier provides some new consideration to 'buy' the promise of extra payment. In Stilk, a promise to share the wages of two deserters amongst the remaining crew was found to be unenforceable as the remaining crew were already under an implied obligation to sale the ship back to Page 15 of 16 protect the legitimate interest in question is unreasonable and it will not be possible to rebut the presumption that the covenant is contrary to public policy and so void. Yvonne v Imre As Yvonne’s purchase of IVGS Ltd included business goodwill, she has a proprietary interest which may legitimately be protected from future competition by Imre. However, the goodwill acquired related solely to the sale of guitars and accessories and not to other musical instruments. To the extent that the covenant extends to musical instruments other than guitars, it appears to be a contract in gross and therefore contrary to the public interest: British Reinforced Concrete v Schelff (1921). Yvonne’s acquisition of the goodwill of a guitar shop, however, is a valuable interest that may be protected by preventing Imre from carrying on a similar business. However, to be valid, the covenant must not be wider than is necessary to protect this interest both in relation to the time and area over which the restriction operates. Whether Imre’s musical instrument shop threatens Yvonne’s proprietary interest is a question of fact depending on whether the two businesses are, in fact, in competition. Yvonne’s customer base may fall within the M25 area, being a reasonable commuting distance from central London, and the specialist nature of her business/the limited number of vintage guitar retail outlets within the M25, suggest this may be a legitimate area in which to restrict competition. However, it is unclear whether Imre’s shop sells vintage instruments. A general musical instrument shop 20 kilometres from central London may not compete with Yvonne’s business at all, even if it sells new guitars and accessories. More information would be needed here. The validity of the agreement will be determined according to the circumstances existing at the time of contract (e.g. Gledhow Autoparts v Delaney (1965)). A seemingly unlimited geographical restriction on internet trade in vintage guitars over five years is likely to be unreasonable as IVGS Ltd only had a small UK web- based presence at the time of purchase. The reasonableness of the area and time restrictions both depend upon whether Yvonne has a loyal customer base and the period over which this is likely to endure. This depends upon the nature and quality of the business. It is possible, for example, that the unique nature of the products sold by Yvonne are such that customers habitually shop around and are not loyal to a single sales outlet. The contract for the sale of IVGS Ltd was between two business people. The court in these circumstances is more likely to find the covenant reasonable in view of the apparent equality of bargaining power e.g. British Reinforced Concrete v Schelff (1921). It may be possible to sever the restriction on web-based trade from the rest of the contract, and also the reference to ‘other musical instruments’. This may only be done if it does not damage the grammar, or the sense, of the clause, and it does not undermine the whole contract: see (e.g.) Goldsoll v Goldman (1915) and Napier v National Business Agency (1951). If it is possible to sever, the covenant may be enforceable in relation to Imre’s ability to sell guitars from his new shop but not other musical instruments. If it is not possible to sever the whole covenant is invalid. Page 16 of 16 Yvonne v Jimmy Yvonne has a legitimate interest in protecting her customer base. Jimmy’s taking up employment, contrary to the covenant in his contract, may represent a threat to that interest. It will have to be determined whether the restriction is reasonable to protect Yvonne against the possibility that Jimmy might ‘lure away’ her customers in relation to its area, scope and duration. In Herbert Morris Ltd v Saxelby (1916) Lord Parker expressed the view that a restraint would only be justifiable if the employee, in addition to knowledge of the employer’s customer base, was in a position of influence. This may depend upon whether Jimmy established personal relationships with Yvonne’s customers and was relied upon for his skill and judgement. This may be unlikely if Jimmy was only employed for nine months. The geographical area of the prohibition must not be greater than is necessary to protect the interest. If it is, the covenant may be unreasonable e.g. Mason v Provident Clothing & Supply (1913). The same observations apply here as above in relation to Imre. The reasonableness of the restriction may depend upon whether Jimmy’s new employment involves the sale of vintage guitars. In Mason, a similar geographical restriction surrounding London was found to be unreasonable, but here it was also significant that the employee concerned was not in possession of customer lists. The scope of the clause may also give rise to issues. The restriction on involvement with products similar to those sold by the employer is arguably too wide in that it not only covers specialist products (vintage guitars) but also products sold more widely in ordinary music stores (new guitars and accessories). The clause may be so widely drafted that it is effectively an attempt to insulate Yvonne from competition rather than a legitimate attempt to protect her customer base e.g. Marley Tile Co v Johnson (1982). Thus the covenant in respect of Jimmy is likely to be considered unreasonable and thus void.