Discuss Agreement In Restraint Of Trade

Section 27 of the Indian Contract Act declares all agreements in trade restrictions, not entered into by tanto, with the only exception is the sale of goodwill. Nevertheless, it is important to understand that these agreements are non-abundant and not illegal. In other words, these agreements are not illegal, they are simply not enforceable in court if one of the parties does not fulfill its part of the agreement. Unlike the common law, even partial agreements of trade restriction or reasonable withholding under the Contracts Act are not valid. One of the principles is that a gentleman does not have the right to prevent his prime contractor from participating in the competition after the termination of the employment relationship, but that he is entitled to adequate protection against the exploitation of trade secrets. In Mason v. Provident Clothing Co, Lords did not allow an employer to hold its screen for a period of three years after the end of its service. Viscount HALDANE LC stressed that advertising capacity is a natural gift and is not due to specific employer training. If they had merely asked him not to attach himself to canvases in the area where he had actually contributed to the construction of the business will, or in a field limited to places where the knowledge acquired in his employment might have become accustomed to their prejudices, they might have been able to secure a right to hold him within those limits.

On the other side, at Fitch v. The House of Lords authorized an alliance that allowed a lawyer to operate within 7 miles of the city, which was reasonably necessary to protect the interests of both parties. But under no circumstances would the court allow alliances against competitions. In Attwood v. Lamont the employer has headed several departments related to sewing, etc. And the employee was just the superintendent of sewing. The agreement with him was that after the termination of his activity as an employee, he would not commit within 10 miles in any of the stores run by the employer in addition to sewing.