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A contractual undertaking not to trade is void and unenforceable against the promisor as contrary to the public policy of promoting trade, unless the restraint of trade is reasonable to protect the interest of the purchaser of a business. [2] Restraints of trade can also appear in post-termination restrictive covenants in employment contracts.
The Law on agreements in restraint of trade has changed as a result of this decision. Prior to the Magna Alloys case, South African courts have accepted that an agreement in restraint of trade is contrary to public policy and therefore void, unless it can be shown that the restraint is reasonable.
The dispute was about restraint of trade, and the judgment declares when such a restraint (which is prima facie void) may become valid. The case also established the "Blue pencil doctrine" as a method for deciding whether contractual obligations can be partially enforced when the obligation as drafted in the contract has an element of illegality.
Mitchel v Reynolds (1711) 1 PWms 181 is decision in the history of the law of restraint of trade, handed down in 1711 in England.It is generally cited for establishing the principle that reasonable restraints of trade, unlike unreasonable restraints of trade, are permissible and therefore enforceable and not a basis for civil or criminal liability.
The House of Lords held that the 5-year agreement was valid and the 21-year agreement was invalid. Lord Reid said he ‘would not attempt to define the dividing line between contracts which are and contracts which are not in restraint of trade’. It was preferable ‘to ascertain what were the legitimate interests of the [suppliers] which they were entitled to protect an
Foley v Classique Coaches Ltd. [1934] 2 KB 1 is an English contract law case decided in 1934 relating to restraint of trade and forward-looking agreements to agree.The initial judgment delivered in the High Court held that there was no "undue" restraint of trade, and this was upheld in the Court of Appeal.
Moreover, per Basson v Chilwan, the determination of the reasonableness of a restraint rests on balancing the interests of the parties to the restraint: the agreement is unreasonable and unenforceable in cases where "the interest of the party sought to be restrained weighs more than the interest to be protected", because such an agreement is ...
Addyston Pipe and Steel Co. v. United States, 175 U.S. 211 (1899), was a United States Supreme Court case in which the Court held that for a restraint of trade to be lawful, it must be ancillary to the main purpose of a lawful contract. A naked restraint on trade is unlawful; it is not a defense that the restraint is reasonable.