Restraint of Trade Singapore

The facts of the case of Chua Chian Ya V Music & Movements (S) Pte Ltd, Chua was a local artist who entered a music publishing agreement with the respondent Music and Movements (M&M). Under the terms of this arrangement, Chua composed music during this period and M&M was in charge for promoting Chua's works and collecting royalties for Chua. M&M would send a summary of royalties to Chua every six months. Chua observed there were inconsistency and M&M gave various explanations as to how they proceed. However, Chua remained unhappy and sought a declaration that all rights to her compositions with M&M even after Chua were also provided to explanation of these inconsistency. The complete statements of account were never provided.

The Court held that the provision enquired is not restraint of trade. There must have a difference between restraints forced on an artist’s ability in composing for living and restraints on the sale by an artist’s compositions of interest. The Court held that it was only gave the rights in the plaintiff’s compositions and did not influence the plaintiff by making music for living.

Furthermore, there is also a case of Wong bark Chuan David v man Financial (S) Pte Ltd [2007] SGHC 5, The plaintiff Mr Wong was director and chief executive officer of the defendant company. He was asked to resign and leave for three months from 13 June 2005. The two party entered into a termination agreement. If Mr Wong did not breach the terms of the agreemant, he would receive advantages which were 13,014 shares in Man Group public limited company and US$263,000. However, MF refused to pay Mr Wong the Compensation and alleged that he had breached the agreement which prohibited him from requesting the employment of MF and from engaging in or gave advice to a competitor.

It was held that Mr Wong had solicited the employment of employees of MF and he were rendering advice to a industrial competitor. The implication was on MF to establish the interests that were meant to be protected by the restrictive covenants and the reasonableness of the same.

The issue of whether Mr Wong would still be entitled to the Compensation given that the restrictive covenants were invalid. The statement that the Compensation was promised in exchange merely or mostly for the restrictive covenants was a fact that had to be claim; the legal consequence if some of the restrictive covenants were found to be invalid did not have to be claim: at .Mr Wong would have been entitled to try to pursue other claims on different causes of action. It was impossible to conclude that he had not been prejudiced. The court would not exercise its discretionary jurisdiction in favour of MF for raising the issue, which it had not claimed. There was no provision in the TA which stated that the Compensation would not be payable if any of the covenants were held to be invalid.

Besides, in the case of Mano Vikrant Singh v Cargill TSF Asia PteLtd[2011] SGHC 241 - [2012] 1 SLR 311, the defendant was previously employed the plaintiff Mr Mano as a senior trader who was involved in the Trade and Structured Finance ("TSF") business which involved leveraging on trade flows between countries to customise cross-border financing solutions which referred as "Structured Solutions". The plaintiff's role in the defendant's TSF business was as an "initiator" or "structurer" of the Structured Solutions.The plaintiff and defendant also entered into an agreement not to compete with TSF for a period of one year once after his termination with TSF.

The defendant also provided that 50% of individual incentive in the individual incentive award plan. However, the terms of conditions of Incentive Award Plan Terms (T&Cs) claimed to forfeit the Deferred Incentive Payments if the employee continued a profession within the industry outside of the defendant within two years from end of his employment unless his termination was by cause of death or disability.

The plaintiff resigned and the defendant accepted the resignation but the defendant claimed that the plaintiff in organised a business which breached the Forfeiture Provision. Therefore, he was not qualified to the balance of the Deferred Incentive Payments and the amount of outstanding Deferred Incentive Payments remaining on the plaintiff's account was US$1,741,894 which accrued interest was excluded.The plaintiff then brought this conflict to seek a declaration that the Forfeiture Provision was invalid and sought the payment of the sum of US$1,741,894 and contractual interest.

It was held that the Forfeiture Provision was unreasonable and unenforceable in restraint of trade. Firstly, the Forfeiture Provision covered duration of two years while Non-Compete Agreement restrained competition for one year. Besides, the Forfeiture Provision did not have any area limit whilethe Non-Compete Agreement was bounded to countries in actual place of business by defendant.

Lastly, Incentive Award Plan unenforceable for lack of consideration. In the court's view, the Deferred Incentive Payments did not considered the Forfeiture mainly. The Incentive Award Plan T&Cs stated where the payments were based on individual, team and business unit results. The Forfeiture Provision might have formed a part of the consideration for the Deferred Incentive Payments but it certainly could not be said to be substantially the main consideration given the support of the Incentive Award Plan.