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Section 27 "Agreement is restraint of trade, void" says thus,
Every agreement by which any one is restrained from exercising lawful trade, business, or profession of any kind is to that extent, void.

Exception: Saving of agreement not to carry on business, of which goodwill is sold.

       !" - Two shopkeeper entered into an agreement that one will pay the other to close his business in that locality.
One closed the shop but the other refused to pay. It was held that the agreement was void. Since the wordings of section 27 do not do not use the
word "absolute" as in section 28, even if the restraint is partial, it will be void.

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   %" - Inventor sold the goodwill of a gun company to a buyer. The agreement was
- Seller will not practice the same trade for 25 and the seller will not do any business that will compete with the business carried on by the buyer at that
time. It was held that the first part is valid because it is reasonable but the second part is invalid because it is unreasonable.

English law tests reasonability while Indian law sees if it is allowed under statutory exceptions or exceptions created by judicial decisions.

In general mutual arrangements between bidder so as to affect the final bid price are not considered in restraint of trade.
 ' ( )  
'%"* - Two persons entered into an agreement where by one would not bid on a tender floated by Postal service
and the other would pay him for that. The other person got the contract but refused to pay. It was held that it was a valid contract.

However, now such matters should be considered with respect to Monopolies and Restrictive Trade Practices Act 1969, which forbids such collusions.

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An agreement that puts a restraint of press not to publish on the conduct of a person is void because it is opposed to public policy.


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 1   '%%2 - Lesor of a property can put a restriction on what kind of business can be done on the property. It is an outlet of
carrying business and not a restraint.


4 ,  
 : Under Partnership Act, partners of a firm may restrict their mutual liberty to do any trade other than within their firm. An outgoing
partner may also be restricted from carrying on similar trade for a period of time.
 : Companies doing business in the same field may regulate their trade practices for example opening and closing time of
business even if they marginally put restraint. However, restrain on employment are not allowed in disguise of regulation.
     ( %5% - Companies made an agreement that they would not hire anybody who has worked in the other company in past 5
yrs. Held void.
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 %!*6 A company was offered collaboration by a foreign company on the
condition that they will maintain complete secrecy. A person was employed in the company on the condition that he will not work for any other company
in the same business for 5 years. SC held the agreement valid.