Reference no: EM133322723

Case: Your brother owns a restaurant in Richmond, Victoria since 2014. He has been very successful in running his restaurant to date and is actively looking to open another one in Preston. He has explored quite a few options and has finally decided to buy an existing restaurant in Preston owned by Walter. Walter has been running that business successfully for the last ten years but is now planning to go on a world tour for a couple of years, so he has decided to sell his business. Walter's restaurant is quite popular amongst its customers and has a seating capacity of more than 80. Your brother's research showed that apart from the quality of food served at the restaurant, Walter is also quite famous amongst the customers who appreciate the presence of Walter in the restaurant. After a lot of negotiations, the contract was signed for the sale price of $500000 (which is a premium price for that business, almost 20% more than the worth of business).

Within three months of the sale of a business, Walter returned from his world tour and opened a new restaurant which is just two streets away from his old business (within 1 Km of old business). Return of Walter prompted many of your brother's customers to go back to him resulting in loss of sales for your restaurant. Worried about the situation, your brother has come to you for your advice.

Question (a) Advise your brother on his legal options under the contract clearly stating whether he would be able to stop Walter from competing with his business or not. Justify your advice with legal reasoning and a precedent

Question (b) What could your brother have done differently in the contract to avoid such a situation? Justify your answer by including an example.