Legal Updates

Restriction on the freedom of occupation in a lease agreement is in contradiction of public policy

January 14, 2025
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A former bakery worker entered into lease agreements with the bakery owners, in which he undertook not to sell baked goods made by him in the local council and its environs for an extended period of time after the end of the lease.

The Court accepted the motion and held that the tenant may sell baked goods because the contractual restriction contradicts public policy.  The validity of a contractual obligation restricting freedom of occupation will be examined while weighting competing interests and principles and determining the proper balance between them. While sometimes it will be possible to restrict the freedom of occupation for the purpose of protecting intellectual property, trade secrets, and the like, it cannot be restricted solely because of the experience that the employee has accumulated in his work.  Here, while the restriction is levied on a former employee who has gained experience during his work for the employer, the restriction that appeared in the lease agreements that do not constitute a framework for employment or trust relations, which may necessitate exceptional employment restrictions.  Hence, this restriction deviates from the essence and purpose of the agreement and contradicts public policy.  Therefore, the contractual restriction is nullified and the lessee is entitled to sell baked goods.

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