Wyatt v Kreglinger & Fernau [1933] 1 KB 793

Award of pension to employee; stipulation not to enter wool trade; whether restraint of trade

Facts

Mr Wyatt was a manager employed by Kreglinger & Fernau (KF). On his retirement, they wrote to him granting him a pension of 200l. per annum providing he did not enter the wool trade, or act in any way to his employer’s detriment. The pension was paid for approximately nine years but then KF wrote to Mr Wyatt advising him the pension was to be discontinued. Mr Wyatt sought a declaration that KF were liable to continue to make the pension payments.

Issues

Mr Wyatt contended the letters he had received from his previous employer amounted to a binding contract under which they were bound to pay him the sum of 200l. per annum. He argued his agreeing not to enter the wool trade amounted to good consideration for the promise to pay him his pension for the rest of his life. KF argued there was no such contract in existence. They contended the letters amounted to a gratuitous promise to pay the pension for which Mr Wyatt had not proffered any consideration. Even if there was an agreement in place on the terms as stated by Mr Wyatt, KF argued that such a contract would be void and unenforceable as being in restraint of trade.

Held

Mr Wyatt was unsuccessful in his claim. Even if the letters amounted to an agreement on the terms contained within them, such an agreement would be void as being against public policy and in restraint of trade. It would be against public policy to seek to restrict competition in this way and any such agreement was, therefore, unenforceable.