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The restraint of trade doctrine is based on the two concepts of prohibiting agreements that run counter to public policy, unless the reasonableness of an agreement could be shown. A restraint of trade is simply some kind of agreed provision that is designed to restrain another's trade.
Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.
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
As far back as Dyer's Case in 1414, English common law chose not to enforce non-compete agreements because of their nature as restraints on trade. [6] That ban remained unchanged until 1621, when a restriction that was limited to a specific geographic location was found to be an enforceable exception to the previously absolute rule.
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.
The General Agreement on Tariffs and Trade regulations on government's influence on trade prohibit export restrictions under normal circumstances; if export restrictions are approved, these restrictions must be non-discriminatory and can only be implemented through tariffs, taxes and fees. However, the government's involvement in voluntary ...
If agreements are not negotiated, a more unilateral trade policy may be applied by the importing country. [4] Voluntary restraint agreements and orderly marketing arrangements are considered grey area measures and have been banned by the World Trade Organization since 1995. All grey area measures active at that time were terminated by 1999.
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.