Mason v. Provident Clothing and Supply Co.

Factual and Procedural Background

Company A operated a “check and credit” retail system in the United Kingdom, using canvassers to recruit members and collect instalments. On 25 March 1908 the Appellant signed an agreement to work as a canvasser and collector. The contract was terminable on two weeks’ notice and contained a post-employment covenant (clause 8) prohibiting the Appellant, for three years after leaving, from working in any capacity for any competing business within twenty-five miles of The City or within twenty-five miles of any location where he had been employed by Company A.

The Appellant was dismissed on 16 May 1911 (with the requisite notice) and later joined Company B, a competitor operating roughly two miles from his former canvassing area. Company A sued in the County Court for damages and an injunction to enforce clause 8. The County Court granted relief. A Divisional Court set the order aside, holding the covenant unreasonable. The Court of Appeal reinstated the injunction. The present appeal, brought in formâ pauperis, is from that Court of Appeal decision to the House of Lords.

Legal Issues Presented

1. Whether clause 8 constituted an unenforceable restraint of trade because it exceeded what was reasonable and necessary to protect Company A’s business interests.
2. Whether the existence of a liquidated-damages provision (£25) displaced Company A’s entitlement to injunctive relief.
3. Whether, and in what circumstances, a court may sever or read-down an over-broad covenant in restraint of trade.

Arguments of the Parties

Company A's Arguments

• The Appellant had been specially trained and had become “a particular sort of expert,” so his employment by a rival would harm Company A’s goodwill.
• Clause 8 was intelligible and enforceable; the liquidated-damages clause did not bar an injunction.
• The breadth of the restriction (three years and twenty-five miles) was justified given Company A’s widespread branch network.

Appellant's Arguments

• Clause 8 was unreasonably wide in duration, geographic scope, and the range of prohibited activities, effectively preventing him from earning a livelihood.
• The business involved no confidential information or trade secrets; success depended chiefly on innate canvassing ability and lists of local customers.
• The covenant was punitive rather than protective and should therefore be declared void in its entirety rather than partially enforced.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

Judge Chancellor (delivering the leading judgment) emphasized that covenants restraining trade are valid only if they go no further than reasonably necessary to protect the employer’s legitimate interests. He observed:

• The respondents’ business was essentially local canvassing; the Appellant’s skill was largely natural, not derived from protectable training or trade secrets.
• A three-year, twenty-five-mile ban covering The City and every place where the Appellant had ever worked—even if his employment lasted only a fortnight—was a “serious” restriction on the liberty to earn a living.
• Public-policy considerations require courts to scrutinize such agreements “with jealousy.” The breadth of clause 8 could not be justified merely because more limited, reasonable protections might have been enforceable.

Judge Dunedin concurred without additional comment.

Judge Shaw elaborated that the law balances freedom of contract against freedom of trade. While restrictive covenants accompanying the sale of goodwill may be enforceable, employment covenants must not exceed what protects the former employer. Clause 8 served to “coerce and punish” rather than protect and was unsupported by evidence of necessity.

Judge Moulton underscored that the covenant was “intentionally unreasonable,” covering an area with about six million inhabitants and barring the Appellant from any role—even clerical or menial—for a competitor. He rejected the notion that courts should rewrite or sever such clauses, warning that doing so would reward employers who overreach and enlarge the “terror and expense” faced by employees resisting enforcement.

Holding and Implications

APPEAL ALLOWED – ACTION DISMISSED. The House of Lords reversed the Court of Appeal and restored the Divisional Court’s judgment, declaring clause 8 void and unenforceable.

Implications: The decision re-affirms strict scrutiny of post-employment restraints, especially where no confidential information or goodwill sale is involved. Employers who draft over-broad covenants cannot expect courts to salvage them; such clauses risk total invalidity. The ruling underscores the public-policy preference for protecting individuals’ freedom to work over broad contractual restraints.