Contracts in Restraint of Trade LECTURE OUTLINE Introduction Restraint of trade under the common law Contracts relating to employment or the sale of a business Contracts of exclusive dealing Trade Associations Severance Restraint of trade under the common law Prima facie void, but can be enforceable if : " party imposing the restraint has a legitimate interest to protect; and " the restraint is reasonable* in the context of protecting that interest; and . the restraint is not otherwise contrary to public interest *the reasonableness of a restraint Assessed in relation to: " the length of time for which it will operate; " the geographical area which it will cover; " the scope of the restraint (the range of activities covered) *the reasonableness of a restraint - Mason v Provident Clothing Co [1913] - Fitch v Dewes [2007] - Beckett Investment Management Group Ltd v Hall [2007] - Littlewoods v Harris [1978] - Clarke v Newland [1991] Contracts relating to employment or the sale of a business · Valid interest to protect? - Herbert Morris Ltd v Saxelby [1916] · Is restraint reasonable? - Mason v Provident Clothing Co [1913] . Contrary to the public interest? – Wyatt v Kreglinger & Fernau [1933] Contracts of exclusive dealing · 'Solus agreements' can amount to unreasonable restraint on trade: - Esso Petroleum Co Ltd. V Harpers Garage (Southport) Ltd. [1968] · Timing · Relative bargaining power - Schroeder Music Publishing Co Ltd. V Macaulay [1974] Trade Associations · Reasonableness? -English Hop Growers v Dering [1928]
· Competition law? Severance · Severance of condition - Ailion v Spiekermann [1976] · Severance of promise: · 'blue pencil test' - Mason v Provident Clothing Co [1913] - Goldsoll v Goldman [1915] Severance · Nature of contract must be retained: -Attwood v Lamont [1920] -Putsman v Taylor [1927] -Beckett Investment Management Group Ltd. -Sadler v Imperial Life Assurance of Canada -Lucas (T) & Co Ltd. V Mitchell [1974] V Hall [2007] Ltd [1988] Next week: Remedies (2) Restitution & Unjust Enrichment