Goldsoll v Goldman

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Goldsoll v Goldman [1915] 1 Ch 292

Covenant restricting the sale of imitation jewellery subject to doctrine of severability

Facts

The plaintiff and the defendant carried out similar business as dealers of imitation jewellery. The defendant sold his business to the plaintiff and covenanted that, for two years, he would not: “…be engaged concerned or interested in or render services (gratuitously or otherwise) to the business of a vendor of or dealer in real or imitation jewellery in the county of London or any part of the United Kingdom of Great Britain and Ireland and the Isle of Man or in France, the United States, Russia, or Spain, or within twenty-five miles of Potsdamerstrasse, Berlin, or St. Stefans Kirche, Vienna.”

Issue

The plaintiff sought an injunction against the defendant for an alleged breach of this covenant. At first instance, Neville J held that the covenant was not too wide in area but the part referring to the UK or the Isle of Man was severable from the rest. Furthermore, the covenant was not too wide because it extended to real jewellery, though the plaintiffs' business was chiefly if not entirely confined to imitation jewellery

Held

The Court of Appeal upheld the decision of Neville J. The covenant was unnecessarily broad in so far as it intended to cover foreign countries. Neville J was correct to limit the injunction in area so that it only extended to the UK and the Isle of Man. Furthermore, the doctrine of severability was applicable to the part of the covenant regarding the scope of the defendant’s business. The covenant must be limited to what is reasonable necessary for the protection of the plaintiff’s business. Therefore, the covenant was only good to the extent that it restrained the defendant from carrying on business in imitation jewellery.

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