Exceptions to Restraint of Trade
DR. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY
LUCKNOW
SEMESTER II
LAW OF CONTRACTS
PROJECT
EXCEPTIONS TO RESTRAINT OF TRADE: CASE LAWS
ACKNOWLEDGEMENT
I would like to extend my sincere thanks to
My teacher and my mentor Mrs. Vishalakshi for giving me this wonderful opportunity to work on this project and for her able guidance and advice,
Vice Chancellor, Dr. Gurdeep Singh Sir and Dean (Academics), Professor C.M. Jariwala for their encouragement and Enthusiasm;
My seniors for sharing their valuable tips;
And my classmates for their constant support.
INTRODUCTION
Section 27 of the Indian Contract Act has been stated as follows-
“Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind is to that extent void.”
This section follows the Field’s Draft Code for New York which was adopted in four American states, and was drafted with the intention of narrowing the English Common Law which allowed restraint as long as it was reasonable. It was enacted to protect the fundamental right of freedom of trade and commerce in India.1 By virtue of being a fundamental right, it can neither be taken away by the legislature (except through procedure established by law2) nor can it be bartered away by the individual. The object of the section was to have as little restriction of trade as possible and provide for a small number of exceptions since trade in India, in those times, was in its infancy and promotion and protection of trade was necessary.3 Broadly, agreements in restraint of trade are those in which one or both parties limit their freedom to work or continue to carry on their profession or business. The generality of its language suggests that it seeks to render all contracts that are in restraint of trade void, with the exception of those specifically exempted. The distinction between Indian and
LUCKNOW
SEMESTER II
LAW OF CONTRACTS
PROJECT
EXCEPTIONS TO RESTRAINT OF TRADE: CASE LAWS
ACKNOWLEDGEMENT
I would like to extend my sincere thanks to
My teacher and my mentor Mrs. Vishalakshi for giving me this wonderful opportunity to work on this project and for her able guidance and advice,
Vice Chancellor, Dr. Gurdeep Singh Sir and Dean (Academics), Professor C.M. Jariwala for their encouragement and Enthusiasm;
My seniors for sharing their valuable tips;
And my classmates for their constant support.
INTRODUCTION
Section 27 of the Indian Contract Act has been stated as follows-
“Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind is to that extent void.”
This section follows the Field’s Draft Code for New York which was adopted in four American states, and was drafted with the intention of narrowing the English Common Law which allowed restraint as long as it was reasonable. It was enacted to protect the fundamental right of freedom of trade and commerce in India.1 By virtue of being a fundamental right, it can neither be taken away by the legislature (except through procedure established by law2) nor can it be bartered away by the individual. The object of the section was to have as little restriction of trade as possible and provide for a small number of exceptions since trade in India, in those times, was in its infancy and promotion and protection of trade was necessary.3 Broadly, agreements in restraint of trade are those in which one or both parties limit their freedom to work or continue to carry on their profession or business. The generality of its language suggests that it seeks to render all contracts that are in restraint of trade void, with the exception of those specifically exempted. The distinction between Indian and
Bibliography: Bangia R K, Contracts-I (6th edn, Allahabad Law Agency 2009) Pollock and Mulla, Indian Contracts and Specific Relief Act, vol 1 (13th edn, Lexis Nexis Butterworths 2006) Chitty, Chitty on Contracts, vol 2 (13th edn, Sweet and Maxwell 2008) Singh A, Contract and Specific Relief (11th edn, Eastern Book Company 2013) Law commission, Contract Act, 1872 (Law Com No 13, 1958) ONLINE SOURCES Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. Ltd. (1894) AC 535 Pattipati Ramalingaiah v Hari Balkrishna Joglekar v. Naro Moreshwar Joglekar ILR (1893) 18 Bom 342 Niranjan Shankar Golikari v Vancouver Malt and Sake Brewing Co. v. Vancouver Breweries Ltd. 1934 AC 181 Firm Daulat Ram v Krishna Rao v. Shankar (1954) 56 Bom LR 973 Hukmi Chand v