A cascading restraint is a drafting technique where a single restraint is expressed in multiple alternative formulations of decreasing scope (varying the period, geographic area, and prohibited activity), with the intention that if a court finds the broadest formulation unenforceable, it will sever the unenforceable formulation and enforce the next narrowest. The technique relies on the “blue pencil” doctrine at common law and the more permissive read-down powers under the Restraints of Trade Act 1976 (NSW).
Cascading restraints are standard practice in Australian sale-of-business agreements. The Treasury Consultation Paper of July 2025 proposed a “one-shot rule” prohibiting cascading restraints in employment contracts, but this proposal does not extend to sale-of-business restraints.