Davies v. Davies, [1887] 36 Ch.D.

359

CBAIWERY DIVISION .tVOL XXXVI CHANOEBY

VOL XXXVI DIVISION 359

would the assignor

not to be enforced because it deprive
Ci ought
tend to of
1887 of the means of livelihood awl would multiplication

of the property which

for in the different parts
In actions getting
Casaxa
re

bound to from time to time But DAVIES DAVIES

the assignor would be assign
CoOleRs
have not to draw the line between con
in the present case we 426 1887

CASTES and contracts which it will KEKEWIOH

which the Court will enforce
tracts TradeF
Restraint of ublic Policy So far as the Law allows Reasonable
is executory on both
Ery L.J not The cases where the contract wholly LimitsCosts on iligher Scale Feb 23 24
case like the present where the 25
sides differ materially from 111 arch 14
the boundary On thssolution of partnership the rettnng partner who received
side has been performed Wherever large
contract on one
sum of money covenanted to retire from the partnership and so far as
the falls within
line is to be drawn am satisfied that present the law allows from the business and not to trade act or deal in arty Avg 25
way
will be enforced It is
where the contract so as directly or indirectly to affect the continuing partners The husi-
the class of cases

one all real ness had been carried on at Wolverhampton and in London
to several subject-matters being
contract relating
In an action by the survivor of the continuing and his
may become entitled partners assignees
to which the mortgagor
and personal estate
to restrain the retiring partner from carrying on similar business in

can see no reason for not specifically perform Middlesex

under any will
that comes to the mortgagor Held reversing the decision of .Keleewich that the covenant to retire
to
ing that contraot as any property
from the far the law was the Court
He has received the consideration and ought to business so as allows too vague for to
under will
enforce
Such contract was enforced
perform his part of the contract
By Cotton L.J Rowen and Fry L.JJ giving no judicial opinion The
Bennett Cooper and though we are law does not
by Lord Lan ydale in old rule that the allow an absolute covenant in restraint of

one which ought to be trade is still binding and the covenant was void on that ground also
his decision think it
not bound by
ileld also that the covenant not to trade act or deal so as to directly

followed or indirectly affect the was to the continuing

continuing partners personal
the case of
pressed upon us
The Appellant very properly partners and cou1d not be sued upon by their assignsa

where the Court came to the con And sembls it was also too for the Court to enforce
Receiver TaiThy vague
Official
that contract to The changes in the doctrine of public policy arid the authorities dis
be conclusion
clusion and it may right
cussed
should be to the mortgagor
all book debts which owing
assign Costs on the higher scale according to Order Lxv rule allowed
If the case had been in point we
too to be enforced
was vague
snbmitted to it The Court seemed inclined to hold EDWARD ALBERT DAVIES Ewarcl Davies and James
should have

that the agreement included not only all debts entered in the
Davies nuder the style of Davies Brothers Co carried on

to be so entered in the
debts which ought business of iron manufacturers or galvanizers at
assignors books but all galvanized

held that the uncertainty made the con with of business in London Edward
which case it might be Woiverhampton place

There no such
which the Court could not enforce is Davies was the father of Davies and James Davies Disputes
tract one
and as cannot
between them and an was dissolution
here the contract is quite different arose action brought for
difficulty
down do not The and an
laid principle action was compromised
that the Court in that case any dissolution
for
find agreement
our decision The appeal the 15th made and followed
think that it is
any authority against dated of July 1884 was was by

fails
formal deed of dissolution The deed according to the evidence
in my opinion
Griclc Freeman was fully discussed beforehand and the result of evidence as to
Cowlanci for
Solicitors Storey agents
Cheims the
knowledge of the parties is stated in the judgment of Mr
Maiden Paterson Snow Co agents for Veley
Justice .Kekewich The deed was dated the 11th of October 1884
ford .Duffieid Bruty
25 and by it James Davies assigned to Davies and Davies all
Beav 252 18

JSLW 2.82
 CHANCERY DIVISION XXXVI VOL XXXVI CHANOIXRy DIVISION
361
The Defendant
his share and interest in the property and goodwill of the part alleged that he and his
partner made goods of
and Davies covenanted to to certain
nership Davies pay James description which were afterwards
galvanized but not by
Davies 10500 at the times and in the manner therein men them and denied that he
1887
carried on the business of galvanizer
tioned Davies released James Davies from sum of 1600 or or otherwise committed
any of the
DAVIES
breacli
covenap He also
thereabouts

amongst
then

other things
due from

as follows
him and James Davies covenanted pleaded

restraint
that

of
the covenant

trade He also
was voids

alleged that
toqyg11e

subsequent
anWb DAVIES

between negotiations
the parties amounted to
The said James Davies to retire wholly and absolutely from acquiescence in his
dealings
but as
appears from the judgment the
the partnership and so far as the law allows from the trade or Court held that there
had been breach of the
thereof in and not to trade covenant and that
bnsiness all its branches act or deal there had been no
acquiescence
in so as to either or affect the said
any way directly indirectly
The action came on for
Davies and Davies hearing before Mr Justice ICekewich
on the 23rd of
February 1887
It from the evidence that this clause was taken from
appeared
Warmingtom Q.C and
the original agreement for compromise and that the Walker for the Plaintiffs
parties
General covenants in restraint
intended to insert more precise covenant in the formal deed of trade are but
bad limited
covenants
but that after some as could not the
are good and what are reasonable
discussion they agree on limits must depend
on the
circumstances of each
form of the covenant they retained the clause as originally
case Even if of the covenant
part
is bad the Court will maintain
drawn the valid and reject the invalid
part of such
10500 covenant Price
The had been paid except 1000 which had been Green Horsier Graves
gives clear rule
retained in pursuance as to the
of other provisions in the deed of dissolu boundary It cannot be illegal to
covenant to observe the
tion Davies and Davies carried on the business until rules of law Avery Lan yford
Countess
of Harrington Earl
the death of Davies in 1885 and the business had since of Harrington
As the means
of
communication
been transferred to Davies Brothers increase the
company called Co area of
restriction must be
allowed to increase Archer
Limited Marsh The
settle what parties may now
In 1885 James they please if the
Davies entered into partnership with one public is not injured Wallis
Day Vhittaker Howe
ijodner who had formerly been an agent for Davies Brothers Leather Cloth
Boat In Bousillon Company Lor
Rousillon
Co and they issued circular stating that they were merchants the covenant
was unlimited
as
and manufacturers of galvanized hollow ware tanks under
to
space Mallam May 10 Pownall Graham
ii
the style of Davies Codner Co Our Mr James Davies was
.8annie Irvine
12
formerly managing partner of the firm of Davies Brothers Co Barber Q.C Cock Q.C and Russell
Roberts for the Defen
CrownS Works Wolverhampton They also published advertise dant

ments to the same effect and they had solicited orders from This covenant is too
vague to be enforced
customers of the old firm were now on It void
They carrying their
16
is
346
380 Old Street Shorediteh Law
bnsiness at
Bing 735
Rep Eq 345

The limited
14 Oh 351
company and Davies brought this action Kay 663
Law Rep
10 11
653
that the Defendant James Davies 87
claiming might be restrained
11 33 Beast 242
959
from carrying on the business of galvanizer or galvanized iron 12 Scott 674 Man
273
manufacturer in Middlesex 969
Beast 383

Al
 CHANCERY DIVISION XXXVI
VOL XXXVI CHANCERY DIVISION
has been 363
as against the policy of the law There no breach
been broken and that there had not been
1887 The Plaintiffs have acquiesced in what the Defendants have acquiescence but he
had considerable doubts as to the law applicable to
done On the first point the clause has no clear meaning the
DAvIES case 1887
retire may mean merely leave that partnership An injunc Warraingeon in
DAVIEs reply DAy
tion is not granted unless the case is clear and the Court will The goodwill has
been sold and this is DAvus
not add conditions Kerr on Injunctions Churchward to protect the necessary stipulation
goodwill The Defendant
Erskine In the Court must has sold it and
Beg .Adeane fact say wants to retain it
now
In each case the Court
what this covenant means before can must look at the
it grant any injunction position of the parties and decide what is
On the second point the rule as to public policy was established able proper and reason
restriction Unless there is limitation
in the middle ages and no doubt latterly the tendency has bounds it is by metes and
better to leave it as the law allows
rather been consider whether the restriction is
to reasonable but is not vague Affecting
word and relates
merely to this
still the rule exists and is acted on Storys Equity Jurispru object is
business and its
clearly defined All parties
Pollock Coker knew that the
dence on Contracts Hitchcock The partner was not to outgoing
solicit business from and such
must be GoWns Locke others
restrictioni still partial Allsopp nant is
quite
cove
reasonable if the goodwill is to be
Wheateroft In no case has general covenant like this been of protected The
subject public policy was considered in
held Egerton Earl Brown-
good low but public
policy changes and what
was thought
at one time wrong
referred to Harms Parsons may cease to be so thought and
old cases may be
overruled
Pilknpton Scott
In Price Green 10 the limits were given to give effect
shews the
anxiety of the Court
to such covenant Ward Byrne was
stronger case Hincle
Witnesses were then examined on both sides especially as to Gray is not now
law TalUs
was much TalUs
criticised
alleged breaches and as to the acquiescence in Rousjllo7
Bousillois Elves
Crofts is most instructive
case In elacoby
such TV/ntmore
Russell Roberts summed up covenant was enforced
Mumford Ge/king
that there shews
is no strict rule
covenant of this sort must be partial being only reasonable as to
space

is not enough Homer Graves 11 is not against that Wardv 1887 Mar 14 KEICEWICJJ
Byrne 12 No doubt in some of the cases the interest of the
Having had occasion not
public has been lost sight of and reasonability only has been long ago to consult the
on covenants authorities
in restraint of
considered and in
many cases the two principles were confused trade found it difficult to
any rules with precision state
but the principle of exists or to use the
public policy still and must be acted language of Chief Jnstie
Parker to reconcile
upon Hinde Gray 13 and Tallis TalUs 14 suited them
the jarring
opinions Having now con-
more at large and with the
said he had no donbt that the covenant had assistance of counsel
criticisms find
my difficulty rather increased than
It is the diminished
2nd Ed 892 Law Rep 15 Eq 59 embarrassment of
wealth for the authorities are
173 195 211 32 Bcav 328 numerous and include
decisions of eminent
Law Rep Cli 756 763 10 16 346 Judges and opinions
II
292 11 Bing 735
391
15
657
4th Ed 311 12 548 14 Oh 351
548
438 457 13 Man a- 195 10
241
Man
App Cas 674 14 391 a- 195
32 18
N.S 305
 CHANCERY DIVISION Xxxvi VOL XXXVI CHANCERY DIVISION

of professors competent to speak It is not for me to because mind they

suggest to
my go long way to
explain the
1887 hov this embarrassment could have been avoided still less is it between earlier and later
decisions Judges have been bound to
DAnEs for me to suggest how it can be remedied by decision of the recognise not the
merely old decisions but the principles on
.1 Court of need be DaLES
highest Appeal or if by legislation disavow which they were founded and yet regarding
DAVIES
public policy as
do more
any wish or intention to than find if possible guide the
principle overriding all they have
DAnES
Kekewleb struggled to adapt these
to the solution of the particular question before me older decisions to the changed circumstances of the thy There
All authorities from first to last concur in one thingviz has think been steady though irregular from the
progress
that the doctrine on this subject is founded on public policy stricter rules of the last
century and perhaps it has not yet
and cannot but regard the jarring opinions as exemplifying reached its limit

the well-known dictum of Mr Justice

Burrough in Richardson to the old
According cases the rule was and
simple enough the
.Mellish that public policy is very unruly horse and reason of it was clear We have the highest
authority for
saying
when once you get astride it you never know where it will
carry that to Mite/wi
according the
Reynolds general rule was
Public does admit
you policy not of definition and is not that all restraints of trade which the law so much favours if
If that statement turn
easily explained requires authority to nothing more appears are bad In other words the
Earl Brownlow and consult the presump
Egertam arguments of tion of law was against them because the law favoured the
counsel and the opinions of Judges covering the whole subject utmost competition in trade There are frequent statements in
including in some to which will presently call atten the
passages books that in thus favouring trade the law desired to assist
tion that part of it which concerns restraint of trade One thing man to earn his living
every
by that trade for which he was apt
take to be clear and it is thisthat public policy is variable and some
possibly Judges thought that this was required by
quantity that it must vary and does vary with the habits capa public policy but to
my mind what is meant by the law
really
cities and opportunities of the public that it cannot have been
favouring trade is that it was considered matter of essential
the same when Chief Justice Tindal decided Homer Graves importance to
encourage all men to trade in order that the
in 1831 as it was when Chief Justice Parker decided Mite/id
public might gain advantage by their tradingin other words it
Reynolds in 1711 that it must have changed and did was considered public to assist
policy England to become nation
change between 1831 and 1860 when Vice-Chancellor James of traders

decided Leather Cloth Company Lorsont and if there had not From the first exceptions to the rule were established
These
been further change before Lord Justice Fry decided Rousillom
exceptions are
generally accepted as
amounting to doctrine
Rousillon in 1880 it must have occurred ere now settled
judicially that covenant in restraint of trade must in
There are many circumstances familiar to us all and some of order to be supported comply with three conditions They are
them connected with politics rather than with policy which bave not always stated in the same order and may therefore state
materially altered the relative position of rivals in trade and of them in the order most convenient to myself They are these
the public whom traders supply Railways electric telegraphs 31 the covenant
first must be made on
adeuate consideration
and telephones have all exercised an influence and quite recently secondly the restraint must be partial an4ihirdly it must be
the parcels to of other novelties has in
post say nothing many reasonable As regards the first it was laid down in Hitchcock
troduced new elements into competition make these remarks Coker
which is
recognised by Sir Jessel in Gravely
Barnard as settling the point
Thug 229 252 Wms 181 that the Court cannot inquire
Law Rep Eq 35 Wms 181
14 Oh 438
Bing 735 351 Law Rep 18 Eq 518
 CHANCERY DIVISION XXXVI VOL XXXVI CHANCERY DIVISION
367

into the of consideration moving contract between regarded there and can
adequacy scarcely seldom if ever be the basis of

1887 two competent parties nominal that is to

say an unreal con judgment This is fully explained by Mr Baron Parke in Ward 1887

Dsvizs sideration will not suffice but provided there is real considera Byrne and also in useful contribution to the learning on
DAVIEs
tion the Court will not inquire further or to consider this subject which will be found in the notes
DAVIEs pause to Hunlocke
DAVIES
whether the object at all commensurate with the price Blaeklowe There some other
gained was are possible limits which might
Kokewlch
Kekewjch
paid for it or whether the covenantee really required the benefits be introduced to make restraint reasonable on which need say
for which he stipulated Hitchcock Coker was decided in no more than that whenever that character ean be ascribed
fairly

1837 and of itself shews large departure from the original rules to them they deserve favourable consideration Jones Lees

Notwithstanding that the two other conditions have in con is case of this class see the judgment of Mr Baron Bramwell

formity with many authorities been above stated Whittaker Howe is the
separately first case in which covenant un
cannot but think that they are and have of late been treated as limited as regards space was upheld different conclusion
one am some confusion has not arisen would have been
Indeed not sure that at least as consistent with Homer Graves
from their treated otherwise The character of which was intended to be
being partial followed and bearing in mind the
of trade be the most doubt about this
supportable restraints may essential feature authority long ago suggested by note to

and evidence of their reasonableness and may of itself constitute Mitehel Reynolds in Smiths Leading Oases and therefore

reasonableness but venture to think that it is in truth no more long current in the profession should hesitate to treat it as
than this and that bound by
dicta safe
notwithstanding many to the contrary guide though haply it in case precisely similar
the authorities for the proposition that covenant in order to be The next case is Leather Cloth Company Lorsont where Vice-

supported must be are better understood construed Chancellor James upheld covenant
partial if to
by the vendors of
process
of manufacture
mean that they must be reasonable therefore proceed to con with their vendees that they would not directly
sider what is reasonable restraint of trade or indirectly on or allow to be
carry carried on in of
any part
With three exceptions which will presently notice it has Europe which for the purposes of the be read as
case may
Great Britain
always been held that covenant in order to be reasonable must meaning any company or mauufactory for
having
be limited as regards space do not think that am bound by
its
object the manufacture or sale of productions then manufac
to hold that must be limited as regards tured in the business
any authority it
persons or nianufactory of the covenantors and
and the practical objections to so holding at the present day would not communicate to the
are any person means or process of
the
obviously greater than those to supporting the necessity of limit manufactures so as to interfere with the vendees This case
as regards space Collins Locke might be cited as
is
important because
against first it is good example of the class of
this but in truth it can better be referred to the class of covenants cases in which covenants in restraint of trade have been con
for as limit nected with the sale
good regards space as regards of business
partiality persons or goodwill and secondly
towards making because the
may however be useful restraint reasonable as Vice-Chancellor stated the principles guiding him
not in
for instance to solicit customers of firm within the language different from that
say employed by any other Judge
United Kingdom might render restraint reasonable which would before him and think implying some from the
departure
not be so otherwise Thern limit of time is of little value It ordinary explanation of the principles of He
public policy does
enters into some cases as for instance Whittaker Howe and

Bousillon Bousilloro to be but 562 Beav 383

presently mentioned it was
Wins Saund 156 Bing 735
438 Beav 383 189 8th Ed vol 417
App Gas G74 14 Gb 351 Ibid 194 Law Rep Eq 345
 CHANCERY DIVISION XXXVI
VOL XXX VI CHANCERY DIVISION
369
not say as much but think he intended to hold that nothing
0.4 London should not enjoy the
could be which was and that advantages of resident
1887 against public policy reasonable banker
becaue he happened to have been
could be unreasonable which according to the experience partner in or connected
DAViES nothing
with bank established 1887f
in the
of mankind was prudently required to secure to purchaser the metropolis and not
DAVIES branches in the provinces having
On the other hand there
DAVIES
eclusive enjoyment and benefit of that which he had contracted are
1ekewlcb trades which can be carried many
on by correspondence DAVIES
to purchase and for which he had paid the consideration stipu and by means
of modern facilities of transit with such ICekewicli
lated by the vendor lie contrasts freedom of contract with ease and with such
advantages both to trader and customer that
freedom of trade and shews that both are equally the favourites it would be difficult
if not
impossible to say what corner of the kingdom
of public poliØy The passages in his judgment to which refer could not be
well served from
other any
will be found on pages 3545 The same contrast was strongly
corner and it is within the know
of all that
insisted in the third Bonsillon Bousilion where
ledge
many who from early associations
on case or for some
other reason prefer goods supplied
Lord Justice Fry then Mr Justice Fry sustained covenant by
at particular place continue
to deal with tradesmen there
the agent of firm of merchants not to establish notwithstanding that
champagne from accident they have
or chance removed
himself other persons or houses
their home
or to associate himself with in
Is there
many miles away
to
anything prevent me from the rule which
the champagne trade for ten years in case he should leave their adopting is
laid down by Lord Justice
Lord Justice rested his on the
Fry and which approves
employment Fry judgment mind True
itself to
my
it is that in
eontrast and held be sound rule extracted many cases the old rule is
just mentioned to
followed
quoted and
without hint of disapproval
from Mallan defendant and the earlier authorities
May that alleging the invalidity
are treated as in full force and
of contract on the ground that it is in restraint of trade has applicable to modern circum
stances An example of this class of cases
cast on him the burden of
shewing it to be clear that the protec is Collins Locke
already mentioned which being
He decision of the
tion extends beyond what the plaintiffs interests require Privy Council
is
entitled to special
respect but the judgment in that
examined the alleged though
further rule that contract if good must case
was rested on Homer Graves
be limited as to and held in the result that the in and other old
space cases authorities it is
explained to be based on
which an unlimited has been
consideration how the rule
prohibition spoken of as void relate ought to be
applied to
particular trade in
been particular
only to circumstances under which such prohibition has locality or in other
iwords how far the restraint in question coul4 be treated
unreasonable This seems to me to accord with common sense
able or
as reasor%
otherwise having
under regard to the protection
and if so it ought also to accord with sound law can well required by the
covenantees and the interests of the
Whittaker Howe that the inhabi public See among
stand notwithstanding other
passages one on page 688 In Egerton Earl Brownlow
tants of say Cornwall or Cumberland ought not to be deprived of
law the
was laid down as having regard to the
the services of local solicitor in Bofinin1 or question under con
practising say sideration might be expected in broader manner
Carlisle because he was formerly clerk in the employ of soli
Mr On page 87
Justice Cresswell states the rule to be that
citor or member of firm of solicitors practising in say London tracts
unreasonable con-
in restraint of trade violate the the
or Birmingham And to take an illustration from business that
policy of common law
trade shall not be
which has been fruitless in contributions this branch
restricted and are therefore
singularly to Mr Baron Parkes illegal
remarks
the law would be difficult hold the inhabi
are more favourable
of it think to that
adherence to strict
to the lines of the old but Lord St
from cases
tants of country town even within moderate distance Leonards

App Cas 074

14 Cli 351 11 653 11
Biog 735
Beav 383 Ibid 123
411 0.238
 CUANCERY DIVISION XXXVI VOL XXXVIJ CHANCERY DIVISION

the solicitor of the

dwells on the variable character of public policy to which have Defendant who was examined as witness

refer in detail in this case foresaw the

1887 already called attention need not to more difficulty of the
of construing clause and 1887
endeavoured to the parties
DAvils
the authorities cited at the Bar or
auy to of the additional persuade to
agree to more
something Dsvas
authorities which The clear and definite even at
have myself consulted recent decisions sacrifice of some other stipulation
Dsvns
DAVm5
in America as well as England are collected in Mr Frederick Unfortunately his advice was not taken and the foreseen result
Kekewleb
has occurred Kekewich
Polloeks work on Contracts Fe states the doctrine of them

to be that the real in hold it to be the result of the evidence

as tending question is
every case whether that in the autumn of
1884 and when the deed
the restriction imposed commensurate with the benefit con was executed it was known to all con
and cerned that James Davies intended
ferred this is only another mode of expressing the test to
engage again in trade and
in trade at least
whether the contract is reasonable The American doctrine closely connected with that of the old firm In
which he fact he was as early
states seems to be substantially the same have not as this
negotiating with
arrangements
worth while to refer to the but Codner for the into
thought it cases they will be partnership which soon
they afterwards
entered but am not
found mentioned in Story on and sure that this
Equity Jurisprudence also was known and am sure
in Parsons Contracts that he was not known to be contemplating
on prefer to any language used else an immediate breach
of the covenant which
where Lord the above cited In order into he The
that of Justice Fry in case entered business of the De
to to the particular case must mention few facts fendant and Codner has for some
apply it time past been and is now
The Edward carried on at 380
Old Skeet in the
plaintiff Albert Davies and the defendant James county of Middlesece and now
Davies who are brothers carried on business in
also am told
elsewhere within the
formerly part metropolitan area and it has

nership with their father Edward Davies as galvanizers and been advertised by them to be that of galvanized iron and
hollow-
galvanized iron manufacturers For the present purpose it will be
ware manufacturers and merchants the
Defendant taking par
ticular credit for
sufficient to say that they had place of business at JVolver having been formerly
managing-partner of the
and another the Defendant old firm at
hampton in London and that was an Wolverhampton This firm of Davies Codner Co
member sells the same
active of the firm Disputes arose and Chancery suit goods as were formerly sold by the old firm and
ensued That suit was As of such are now sold
by the plaintiff
compromised part compro company their successors in business
It was
mise James Davies retired from the firm on the terms of his urged that irrespective of the the
meaning of
covenant
the Defendant has not
receiving large sum in payment for his share of capital and broken it because he has not galvanized
any goods that his manufacture
goodwill and entering into covenant which was first expressed has been restricted to not
goods
in an agreement of the 15th of July 1884 and afterwards intro galvanized and that what he covenanted not to do was not to

duced deed the 11th of October the following carry on the business of
into of 1884 in galvanizer The complete though
language The said James Davies to retire
wholly and abso not the only answer is that in numerous circulars and trade-lists
he has stated
lutely from the partnership and so far as the law allows from that his firm does manufacture
galvanized articles
and that he
the trade or business thereof in branches and not trade cannot avoid this
all its to by proving that he employs others
to galvanize articles ordered of
act or deal in
any way so as to either
directly or indirectly affect him or be heard to he
say that
advertises himself as
the said Edward Davies and Edward Albert Davies The pre manufacture when he is not one in fact
to
paration of the deed occupied much time and led to much dis only attract customers
If the
cussion especially about this particular clause Mr Willeocic Plaintiffs had failed to
prove thi breach must have
held them to have that the Defendant
proved has so traded
4th Ed 31.5 292 acted
or dealt
6th Ed sect 11 as to affect them the in their
part chap Plaintiffs business It is
 CHANCERY DIVISION XXXVI VOL XXXVI CHANCERY DIVISION 373
372

has solicited orders from cus Is the covenant too vague If it is the vagueness is due to
that the Defendants firm
proved

tomers of the old firm in the neighbourhood of Croydon and else the introduction of the words so far as the law allows have 1887
1887
is that these were customers no doubt that the covenant must be read as James
and the only excuse given obliging DAViES
where
DsvixS
Codner who was agent for other firms Davies to retire absolutely from the old firm and in this qualified
formerly obtained by DAVIES
DAviEs
merchant on his own account manner from the trade or business of the old firm and have to
the old firm and was also
besides ICek-ewich

have no doubt whether the has or has not an

Kekewleb
Such an excuse is idle and requires no answer consider qualification intelligible

of the first of the cannot the framers of this covenant on

that if compelled to do it by the invalidity part meaning compliment

the second divisible from it and the introduction of new form nor have been able to find
covenant might treat as any
entitle the Plaintiffs to relief on the ground guide to its meaning by reference to similar language used in
separately so as to
It not contested that the Plaintiff com settlements of leaseholds copyholds or heirlooms according to
of this latter breach is

dl the covenant and to uses of freeholds however no reason why should not
entitled to sue as assignees see
pany are

claim if it ought to have been granted to the construe it as meaning to the full extent that the doctrines of
an injunction
English law as interpreted by the High Court or the Court of
covenantees
original
whether the coven the resort the House Lords
There remains therefore only the question Appeal or in last of will allow

are raisedfirst that it man to contract himself out of the privilege of engaging in
ant is valid or not and on this two points

for Court of law to enforce and secondly that it is

particular trade or business The phrase is not happy one
is too vague
of trade There is another questionwhether and do not commend it as precedent but cannot say that it
bad as in restraint

debarred from relief to which they might is so vague that cannot construe it
the Plaintiffs are any
for want how the law stands
otherwise have been entitled by conduct which of have already stated in my opinion

in the argument acquiescence will am not called upon to say and cert4inly am not prepared to
say
better word was styled
need not do so at length what are the reasonable limits as regards space of covenant in
with this first but any
deal question
of amounting in restraint of such trade as is in question here have only to
It would require cogent evidence acquiescence

and founded of course on complete decide whether those reasonable limits include the place in
law to release of right

defeat the claims of Plaintiffs suing on covenant which according to the evidence the Defendant has bee4 and
knowledge to
writ issued business similar to that of the Plaintiffs and
October 1884 and enforced by on
is
11th of carrying
dated the
There no evidence of this character have no doubt that they do The injunction asked is against
the 4th of March 1886 is

which may or may tradQ in the of and do not wish to intimate

over the illness and death of the father county Middlesex
pass
with negotiations between the parties cr the doubt whether having regard to the nature of the trade and
not have interfered

of their claim Suffice it to the evidence in to the extent of the business of the old
distinct assertion by the Plaintiffs respect

of the interval between the date of the deed firm this would be reasonable but as matter of form it ought
say that during part
the Defendant from on the busi
the writ and when
to
of the Plaintiffs or their prede go to restrain carrying
and the issue

Defendants intention to be ness of iron manufacturer or take

knew of the galvanized galvanizer
cessors in title enough
for friendly settle these words from the deed at 380 Old Street This will not of
on their were pending
guard negotiations
should be him from carrying on business elsewhere
ment on some such terms as that the Defendants firm course directly prohibit

manufactured in the of or within reasonable limits beyond it

to sell and should undertake Middlesex
to sell
at goods county
liberty
to these negotia but of he will be summarily restrained if after
see no occasion pursue equally course
by the Plaintiffs

within reasonable time this this he continues or commences to do so think he must also
tions They broke down and
be because this likewise reasonable from
commenced restrained is trading
action was
VOL XXXVI
374 CHANCERY DIVISION XXXVI VOL XXXVI CHANCERY DIVISION
375
acting or dealing in any so as to either or indirectly
way directly
to review my judgment on this
point as well as
1887 affect the Plaintiff company in their business of galvanized iron others and to
lay down rule for guidance in other like
manufacturers or and this part of the cases
DAVIES galvanizers injunction will 1887

The C.M
operate without limit as regards space Plaintiffs are also
DAVIES From this decision the Defendant
DAVIES

entitled to damages which must form the subject of

inquiry appealed The appeal came
Kekewich on for
hearing on the 1st of DAVIES
The costs must of course follow the event But recent
August 1887
case

called my attention by no means for the first time to Order xv Barber Q.C and Cock Q.C Russell Roberts with them for
which the
rule empowers the Court on special grounds to award Appellant

successful party costs on the higher scale The case which The covenants to retire so far as the law allows from the trade
have mentioned was patent case and acceded to the plain or business and not to
trade act or deal in
which was not without any way so as to
tiffs suggestion opposed perhaps the either
directly or affect
indirectly Davies or Davies
reflection which deserved That case of are
it is course beyond covenants without
any limit of time or and
space therefore bad
recall and would not recall it if could refer to it partly as general restraint of trade Mite/tel
Reynolds
for the of that should not Storys
purpose stating necessarily grant Equity Jurisprudence In the
reporters note to
such and Avery
an application again in similar case partly because it Lang/ore there is list of cases in which restriction as to trade
has as have mentioned induced me to look again closely at the was held to be from
good Mite/tel
Reynolds in 1711 down
some to
rule which presents practical difficulties am now dealing Talus Talus in and
1853 in note to
with case which is certainly special one as regards its nature tracts the
Pollock on Con
list of cases is continued down to Rousillon
and importance It necessarily occupied considerable time Bousillon in 1880 Out of all these cases there are
many witnesses were called and the oral evidence was of three in which only
there was no limit as to
space namely Wallis
special character It involves large questious of the Day which
highest was case of master and servant Leather Cloth
to the parties concerned and is also
importance important to Corapany Lorsoat which was the case of trade
others It was to the Court in such manner that and secret
presented Rousillon
Rousillon in which it was held that the
have been able to discuss the real in issue test true
questions without was reasonableness and that in the particular
time oral the circumstances
wasting on or documentary evidence touching matters restriction of the covenant was not greater than was required
not really in dispute or for some other reason not immediately for the

Without
protection of the covenantee Bt the question of
relevant wishing or intending the slightest reasonableness
injustice does not arise unless
there is some limit of
to counsel who have rendered me invaluable assistance think or time If the space
covenant is unlimited the general
in rule is still
that this is measure due to the in which the case
great way applicable because such unlimited restrictions are
both against
was prepared for trial on sides the labour and responsibility policy Bunlocke Blacidowe
public
Homer
Ash/ore 10 Hitch
falling mainly on the Plaintiffs and it seems to me to be essen cock Ooker II Ward Byrne 12
case to which Order LXV rule therefore Collins
14
Allsopp Wheatcrojt 13
tially

to direct that the costs subsequent

applies
to the reply shall be
Locke Jone Lees 15 Pearson Pearson
16
propose Wins 181
taxed on the higher scale see no reason for the Ed.0
Wins Saund 156
extending 1830 Vol i.ch 292
p1 10 Bing 322 326
direction beyond that date will of course hear Mr Barber Kay 663 667
11
if

438
391
he has anything to say on this point for wish to make it as 12 548 561
4th Ed 316
little as possible matter of discretion and if the case is taken to 14 Oh
13 Law Rep 15 Eq 59
351
the Court of Appeal that Court will think at
14 App Cas 674
hope itself liberty 273
Law Rep
15 189
Eq 345
16 27 Oh 145
2C2
 CHANCERY DIVISION XXX VOL XXXVI CHANCERY
yj DIVISION 377

In the present case the words so far as the law allows import
The rule against covenants in restraint of trade based
being
on public
1887 no limit at all
They only make the covenant vague as well policy must vary from time to time and the state of 1887

wide and the

impossible for the Court to enforce such
It society facilities of
DAVIES as is covenant communication vary Eqertom DAY
It is not the duty of the Court to make contract for the parties Earl Browniow
DAVIES Notwithstanding some of the old cases the
DAVIES
They ought to definitely what they mean and then the principle by which the Court in modem times
express is guided is the
Court can decide whether is valid reasonableness of the and
it covenant that reasonableness ha refer
ence to what is
necessary for the protection of the covenantee
Warminyton Q.C and Walker for the Plaintiffs and if covenant unlimited as to space is shewn to be necessary
for his protection the Court will consider
Assuming that as general rule unlimited covenants for it reasonable Homer
As/lord Mitcitel
restraint of trade are invalid we contend that the covenant in Reynolds Hitchcock Coker
the case is one which the Court will enforce In the
Archer Marsh Whittaker Howe
present Leather Clot/b Gorn
Lorsont basil/on
first place it is given on an assignment of the goodwill of the Bousillon

business and for valuable and is in confirmation of

With respect to the latter
consideration part of the in which
covenant the
covenantee
the covenant for quiet enjoyment which is implied in the assign agrees not to trade act or deal in
any way so as to
either
meat When the rule against covenants in restraint of trade was directly or
indirectly affect his former partners it must
be construed
established there was no such thing known as goodwill and this by reference to the
subject-matter namely trade

covenant must be with reference competition The covenant

interpreted to its special object may be severed and the Defendants
and the present state of circumstances The rule has been may be restrained from exercising any trade so as directly to
interfere with the Plaintiffs
modified already to certain extent by permitting covenants Bigots Case Ma/lam
May 10
limited as to space If unlimited restraint of trade is against
Price Green 11 Baines Geary 12 There is nothing un
that of reasonable in such covenant for
public policy it is equally against public policy assignors the protection of the assignor

goodwill should not have

of goodwill and it
may be sued on
adequate protection by the assignees of the
This covenant is not unlimited It is
expressly limited by
covenantee Jacoby Whitnzore
13
the words so far as the law allows The meaning of this
Barber in reply
phrase is subject to such reasonable limits of time and space as

The last clause of the covenant

the law imposes that is such limits as are reasonably required
is still more vague than the
first It is
to the covenantee The form of the covenant was taken
impossible to say what act affects the Plaintiffs
protect
The Court could
not enforce it nor could
from an executory agreement and the Court will give effect to any damages be assessed
for the breach of it It
it as such according to the true intention of the parties As it is moreuver personal covenant and
cannot be sued on their
stands it is not too for the Court to enforce When any by assignees
vague
breach of the covenant is of judge or jury will
Tnu
complained COURT before giving judgment offered to the counsel for
have no in whether the breach has
difficulty deciding alleged theResponclents the opportunity of
rearguing the question whether
been within the reasonable limit In the would
present case it
II Law Rep
be held to refer where the firm had been
Eq 345
probably to any place Bing 322 14 Oh 351
carrying on the trade and would be confined to the lifetime of Wms 181 11 Rep 26 li

438
the covenantee Covenants in marriage settlements to settle pro
10 11 653
Ibid 959
been
11 16 346
perty so long as the rules of law will allow have always Beav 383 12 35 Ch 154
held good Why should not this covenant be equally valid 13 32 11 18
 CHANCERY DIVISION XXXVI VOL XXXVI CHANCERY DIVISION
379

an absolute unlimited covenant not to exercise particular trade still existing So also in Wctrd Byrne Hinde Gray
1887 was necessarily invalid Avery Langford and the cases there collected Archer 1887
Marsh Whittaker Howe
DAVIES was decided 4nder misappre.
1887 Aug Warininyton Q.C Walker with him for
hension of the previous authorities
DAVIES
Leather Cloth
DAVIES
the Respondents Company
Lorsont was the first in DAvIEs
case which wider rule was
suggested
Th rule that an absolute covenant in restraint of trade is but the words natural and not unreasonable used by Lord
necessarily invalid was based on public policy and therefore Justice James in that case are not found in
any previous ca.se
must yield to changing circumstances Since the decision in There is no authority for that
saying limit of time is
sufficient
Hitch qock Coker the rule has not been strictly adhered to there must be limit of distance If there is such limit the
but measure has been introduced by which to test the validity Court will decide whether it is reasonable If there is none at
of the covenant namely the reasonableness of the covenant with all the covenant is void

respect to the necessary protection of the covenantor who has

valuable consideration It is that there should

1887 Aug COTTON L.J
given impossible
This is an the
be fixed rule as to distance more than as to time An appeal by Defendant against
any judgment of
Mr Justice Kekethioh which
absolute covenant not to trade has been held to mean not to trade enforced by injunction covenant
contained in deed which
in England When the rule was established England had no was executed by the Defendant shortly
after he separated from
colonies and such covenant would operate as an absolute re his father and his
half-brother who is one
of the Plaintiffs on the dissolution
striction of trade but now it would have no such effect There of the the Defen
partnership
dant to them
assigning all his interest
is nothing now against public policy in man being restrained in the business
including
the goodwill of the business
from trade within England the lives of the The other Plaintiff the company
particular during is
which has from
He can trade in Ireland and the colonies The limit of bought the co-Plaintiff the half-brother
parties of the
Defendant
the lives of the parties is sufficient limitation. The sale of

It was argued that it was

goodwills also has been of recent introduction All this shews question of considerable importance
and so think
the it is and there are
that reasonableness is now only rule by which these cove many questions which arise as
to whether we to
nants ought to be and there an ought enforce or can enforce
judged is increasing tendancy covenant like
that which contained
modern view Ward is in the
in decisions to adopt that Byrne present deed need not refer to
anything else than the
Whittaker Howe Elves TalUs Ta ills deed and simply take the
Grofte covenant
which is in this form
Rousillon It is deed in which
Leather Cloth Company Lorsont Bousillon both parties cove
nant one with the other and then there follow the covenants
to each The
Cook Q.C for the Appellant in reply
applicable particular covenant on which the De
fendant is sued and which is his
covenant is this James Davies
Whatever be adduced in
arguments may as to public policy to retire and
wholly from the
absolutely partnership and so far
the changed condition of things in this country it is clear that
as the law allows from the trade or business thereof in all its
the old rule absolute covenants in restraint of trade still
against and not
branches to trade act or deal in any
way so as to either
remains in force In Collins Locke the rule is stated as
directly or affect the
indirectly said Edward Davies that is his

438 391 father and Edward Albert Davies his

that is
half-brother
548 Law Rep Eq 345 5M.W 548 6A.E 959
Beav 383 14 Oh 351 Man 195 Beav 383
10 241 App Cas 674 Kay sea Law Rep Eq 345 354
 CHANCERY DIVISION XXXVI VOL XXXVI CHANCERY DIVISION
381

Now of course there is no difficulty about tho covenant to nant the law does not allow it because if that is
so it is an
1887 retire from the partnership but what follows is the absolute
absolutely covenant to retire from this trade or business that is to 1887
DAvns point on which the first question arises and as understand it is
say it is an absolute restraint
upon the Defendant during his life
in DAVIES
substantially the branch of the covenant consequence of which time from carrying on anywhere within
DAVIES England the business in
Mr Justice Kelcewich granted the injunction should state that which he was engaged Mr Justice Kelcewich held that
Dsvms
Cotton in conse
the partnership having been carrying on business partly in London of the change of Cotton LA
quence circumstances which now exist in
England
and at the Defendant after the dis the old
partly Wolverhaniptom shortly rule which was laid down from very early times that
solution joined one who had been formerly connected in business covenants in restraint of trade are bad was no longer to be con
with the partnershipand to start business somewhere sidered the law of
proposed as the Court and after the discussion which
in London The injunction was to restrain him from carrying on has taken and with
place my view of this covenant we must
what place would
business there not or would not be consider that
defining question
within the covenant but to restrain him from carrying on buM- Now that that the old law
was is and
undoubted in the
year
ness there and also restraining him from acting in violation of hooks in V.s reign
Henry there was case which laid down
the second branch of the covenantthe ccords being that he generally that covenants in restraint of trade are bad that it
be restrained from carrying on the business of galvanized iron is to
contrary public policy and contrary to the interests of the
manufacturers at 380 Old Street in the county of Middlesex and public that
any man should be restrained from on
carrying an
also from trading acting or dealing in so as either honest business
any way for the best of his own advantage and for the
directly or indirectly to affect the Plaintiff Edward Albert Davies best of the of the
advantage public that was so
originally said
or the company in such business but
undoubtedly to some extent that has been modified and in
will deal first with the first portion of the covenant on which the first instance it was modified in this
way that
partial re
as understand Mr Justice Kelcewich has acted and must say straints might be good Even when that was established it was
that there is an example here which ought not to be followed first of said
all that the Court when
must it is asked to enforce
Where parties have entered into an agreement to execute deed such see whether
covenant the consideration was sufficient
to contain certain covenants ought certainly to work out Now
they that is because
gone if there is valuable consideration then
their agreement and not to come to the Court simply to construe the Court will not consider but will leave the parties to
consider
what was intended to be an executory agreement For what we whether that consideration is or not
is sufficient Then the
have here is thisthe Court is not asked to order performance of Courts have done this Where there has been partial restraint
this which was an agreement by
originally directing proper only the Court has into the
gone consideration as to whether
deed to be executed bat we have to decide question of con that is
reasonable namely whether it is
reasonably required for
struction to say what is the proper effect of this covenant and the
protection of the party with whom the covenant is entered
for
my part should decline when the matter comes before us in into Well then has it
gone further thaa that It is said that
this
way to treat it as executory and to see how and in what way there are which have
cases laid down that the to be
only thing
the Court would direct an with these words in it to be
agreement considered in whether
judging these covenants can be enforced
construed But that is not the ground on which intend to or not and whether they are valid or not for it is not only
decide this case Is this covenant one which the law will allow
question of equity is to see whether they are reasonable
That is the point intend to take It is said that this is con Mr Warmingtom contended that the reasonableness required
tract to retire from the trade or business in all its branches if aud had reference to what was reasonably necessary for the protection
so far as the law allows Now in
my opinion if that is the cove-
Hen Term Pasch p1 26
 DIVISION XXXVI VOL XXX VI CUAIWERY DIVISION 383
CHANCERY

that the first rule restriction That think introduced what may here mention
of the covenantee and it is very probable
of trade now covenant in either
mentioned that absolute covenants in restraint that undoubtedly if is
any way limited 1887
1887 which
that they are not reason sufliciently as regards space or sufficiently as regards time then DAVIES
established on the ground
are bad was
DAVIES consider is be considered absolute restraint of but
that what we have to it will not as an trade
able and in that sense it may be DAVIES
Dvus if we look at limited restraint and then the question as to whether that
whether they are reasonable But in my opinion only
Cotton LI
L.J there is this to be limit is reasonable will come into consideration
Cotton
the cases on which Mr WarmMglofl relied
been limited restraint and Now that case was decided in the year 1837 and to
my mind
that where there has
observed
Court has considered with refer shewed no at all from the old rule unless it was
it departure
limited restraint only then the
whether though the from the old of the sufficiency of
of that covenant departure principle considering
ence to the validity

restraint is reasonable and of course the consideration

is limited the
restraint
have endeavoured will not through all the eases but we find afterwards
in stating the rule as go
that must come even
restraint is bad but that Mallam May and there we have the rule laid down as
that an absolute
to do namely
the restraint is reason understand it most clearly by Baron Parke What he says is
be good provided
limited restraint may
required for the protection
of the this and this was in the year 1843 The rule as laid down
able only and such as was
is entered into If one looks
by Lord Macclesfield and Lord Chief Justice Willes is that total
whom the covenant
person with
which have been referred to by restraints of trade which the law so much favours are absolutely
what are the authorities
and sees
think it will be found that they bad and that all restraints though only partial if nothing more
Mr Warnvington in argument
the general are presumed to be bad That think has been modified
where the Jndges though admitting appear
really ar cases
have considered as to this extent that the presumption is not that such covenant
sometimes doing so expressly
rule and
whether the the on the
which was before them is
bad but it is rather for Court to consider whether
partial covenant
regards
the restraint was reasonable facts it is or is not bad Then he proceeds But if the circum
case was one in which
which be referred was Hitolwoek stances are set forth that presumption may be excluded and the
the first case to
think
the rule of inquiring into the Court are to judge of those circumstances and determine whether
Coker That case got rid of
but in other respects
it deals the contract be valid or not Then he quotes Miteket Rey
of the consideration
sufficiency
restraint in that case soils and he quotes it undoubtedly not as his own opinion
whether the particular
with the question
twice considered once but as expressing the rule that is laid down by earlier Judges
reasonable or not That case was
was
Court and then again in the Exchequer he does not in any way deal with it as rule which is departed
before the Divisional
limited descrip from there had been alteration in the
was of the most although very great
Chamber There the covenant
from carrying circumstances of the kingdom between the year 1843 and the time
to restrain the defendant
tion because it purported
three miles thereof It was when Mite/id Reynolds was decided Then Baron Parke goes
at Taun.tom or within
on his business
and therefore the observations
of
on and says this Contracts for the partial restraint of trade
most limited as regards space
reference
which are relied on must be considered with are upheld not because they are advantageous to the individual
the Judges
reference to covenants with whom the contract is made and sacrifice
pro tanto of the
to that covenant and not generally with
Tin.dcd
is
rights of the community but because it is for the benefit of the
which are not so limited What Chief Justice says

in this case to they should be enforced And that what

this We
cannot therefore bold
the agreement public at large that is

being indefinite he was considering when he entered into the question as to

of the restriction
be void merely on the ground
reasonable
as to duratibn
the same being in other respects 11 653 11 664

438
4ScE 456 Vms 196
184 CHANCERY DIVISION XKXVI
VOL XXXVI CHANCERY DIVISION
whether or not in that paflicular case the restriction was reason
the ease of trade
able not secret and not as an
or ordinary case of
1887 cove
nant to restrain trade What
DAViES
have passed over several cases in which there have been these
the case of
he
says is this No doubt in 1887
the Leather Cloth
considerations but all of them are cases where there was partial Company Lorsont Lord Justice
DAVIES DAVIES
then Vice-Chancellor James threw
restraint to be dealt with and the Judges were applying their some doubt on the existence
Cotton of hard and fast rule which DAVIES
minds not to the general rule but to the rule as applicable to makes covenant in restraint
of trade invalid if unlimited in Cotton
restraints so limited area but there were
sions in expres
the instrument in that
But then it is said that not only are there these expressions of case limiting the generality of
the covenant and it was in substance
opinion which think in their application were misunderstood case of different class
from this since the restriction
but that there is authority which now leads to the conclusion that against trading was only con
sequence of lawful
the old rule is
gone and is thing of the past Now what were
clearly restriction against trade
divulging
secret. In this point of view it
those cases will take them in chronological order because may probably be thought to bear
some analogy to Wallis
think that is probably the best way of dealing with them Day Assenting as do to
that
every
thing was said in Leather
Whittaleer Howe before Lord Lan gclale was first in date Cloth
Goinpany Lorson can
treat it
and undoubtedly that was because it was an abso
hardly as authorizing me to
depart from the
strong case recognised
rule as to limitatiou.of
lute covenant to restrain solicitor from within the space in case so different from
practising it as the
present is and unless that rule be
kingdom for period of twenty doubt myself whether departed from the
years covenant
here is clearly bad There Vice-Chancellor
the time was not so large there that it ought not to be con Wickens on whose
opinion lay great store not
limited covenant by Lord Langdale only treats it
siclered as It was treated as do but what is
probably more important he treats the old
and considered by him as covenant limited and therefore it rule in the year 1872
as still
subsisting and as the law of
was to him to consider whether the limit was reasonable the Court
open may observe
here with reference to that observation
one He held that it was but that does not shew departure
of his that the covenant
was limited that it
from the general rule really was limited to the period during
which certain the
The Lord when Vice- patents right to obtain
next case is that before Justice James which throughout
Europe was granted to the plaintiff
Chancellor the Lather Cloth Company Lorsont That were to last and
that
it
may be
it was limited in
undoubtedly was regard to the ex time though not in in such
strong ease having only space
as to make way
used by the learned when he decided the case
it limited and not general
pressions Judge covenant With the
greatest respect to the late Lord Justice
but in fact what really was in contest there was contract as to James if he intended to
express his opinion that the
the trade and the covenant not cases had authorized
divulging of secret to carry him to
that on the say
ground of the old rule
on the trade was and policy had been
only connected with in order to give effect
departed
from think he could
to the contract not to the trade and not have
divulge secret although sufficiently considered what
that was to which the observations
he does make observations in in of the
general his judgment yet my Judges relied on by
Mr Warminyton were
opinion the case must be considered so far as it is decision addressed_namely not to the general
question as to whether the
decision and absolute covenants
only on contract applicable to trade secret were good but to
the
question whether limited
not to covenant in restraint or in of covenants were in the
generally prohibition particular
cases good It is clear that
trade find that Vice-Chancellor WicLens in Allsopp Wheat- Vice-Chancellor Wickens was not
aware that the old rule had been
croft 35 treats that case before Vice-Chancellor James as being departed from and his view is

Law
Beav 383 Law Rep Eq 345 Law Rep 15 Eq 59 Rep 15 Eq 64 Law Rep Eq 345
273
 CHANCERY DIVISION XXXVI VOL XXXVI CHANORItY DIVISION
887
confirmed Locke Sir
by what was said in Collins by Montague now the true rule that where there is limited covenant
1887 Smith when the decision of the Privy Council because have you
giving to consider how far having
regard to the particular cir 1887
DAVIES what he says
is this Numerous cases which have been decided cumstances of the case the limit is reasonable one About
on this subject covenants in restraint of trade are collected that ease no
Dsvma
DAVIES say more after what have said on the cases
in the notes to Mite/tel It be from DAviS
Cotton L.J
Reynolds may gathered generally
them that agreements in restraint of trade are against public Then it was said here that Cotton L.J
this is not general covenant but
policy and void unless the restraint they impose is partial only so far as the law allows What Mr Warmingeon said in that
and they are made on good consideration and are reasonable He of his
part argument was It is covenant not to carry
the two on trade
clearly therefore lays down things that are necessary within such limits of time and space as the law will consider
they must not be unlimited and then also if they are limited reasonable Now it
construing in that which
way hardly think
there is the further question to be considered namely whether is the right construction it is
covenant which the Court in
even having regard to the limit they are reasonable and in
my opinion ought not to
my
enforce If
parties wish to ask the
opinion that old law notwithstanding the opinion of Mr Justice to assist them in
Court
restraining those with whom they are
Kekewich of the change which has taken place in the country from dealing
breaking limited covenant against on
carrying trade
still ought to be recognised and regarded by us as the law and they must in my opinion themselves fix the limits within
do which
ought not to be departed from by us If
any one is to it it there is to be no carrying on of the and then
trade
must not be they do it
this Court but the House of Lords at their peril The law will determine whether that limit is
Then if that be so and the covenant bears the construction good one or whether it is one which is so unreasonable that
which at one time was contended for by Mr Warmingtom in
my covenant must fail It is
the
entirely different from the
the covenant covenant
opinion is bad because the law does not allow an to settle in certain
property line or family so long as the
absolute covenant to give up trade need not go into the rules of law and equity will allow There
No
are certain de
reasons why that is so but there are plenty of reasons for it finite rules laid down as regards the limitation of
property which
man ought to be prevented dnring his life from earning his live will
prevent it from being so settled as to exceed the rules
lihood by carrying on his trade and the public ought not to be against perpetuities and those are definite fixed rules There is
prevented from the benefit which they may get from man who no definite fixed rule as to the limits within which trade
skilled in trade on that trade be restrained can
is carrying That must depend
upon the circumstances of each
There is one other case which have omitted to mention in its
case and in
my opinion it is
wrong to make covenant in this
regular order but was diverted from it by that case before form and wrong for the Court to enforce it because one sees at
Vice-Chancellor Wiekens and the Privy Council case refer to once what difficulties will arise if an injunction is
un Mr granted
the case which was decided by Lord Justice Fry think Justice Kekewich has said that
carrying on business
he used which at Old
doubtedly expressions shewed that he took Street in the
county of Middlesex is within reasonable
somewhat wider view than do of the lawa looser view he limits but
perhaps has not defined what else will be so and are we again and
may say without disrespect In that case of .iusillom Row again to have this
question to arise on the covenant where the
sullen there was the limit of time which might have made the parties have left the covenant
entirely indefinite and have
covenant limited one and not general covenant in absolute to get the sought
Court without risking the validity of their
restraint of trade and if so it comes within wbat think is from time to covenant
time to
say whether particular space and
ticular par
App Cas 686 lB Wms 181 Sm 0.6th Ed p.350
time is within the limits In
in
my opinion if one looks at
14 Oh 851 it
that which is the modified form the answer to it is this
 CHANCERY DIVISION XXXVI VOL XXX VII
CHANCERY DIVJ5IO
889
there are no limits fixed by law which can be regarded as intro Bown L.J
1887 duced into this covenant covenant in this form indefinite as
We are asked to enforce the covenant
in Court of which
DAvms it is my opinion is one which neither Equity nor
has read which
the Lord Justice
divides itself into three parts the
Court of Law ought to enforce The parties must make up their first
DAVIES that part is an
agreement James Davies is to retire
minds regards the limits of
to say what they agree to as time or
from the wholly and absolutely
Cotton L.J
partnership the second that
space within which there is to be no trading so far as the law allows
he shall retire
Then one comes to the second branch of the covenant on
incorporate the words he shall retire from the
previous section or else that he shall
which Mr Justice Kekewich to some extent acted though as undertake to retire
because
it is
immaterial to
understand his he relied on that which my argument which of
judgment principally these
readings is
adopted from the trade or business
have been already discussing This is the stipulation not to
and the
thereof in all its
branches
third of the
part covenant
trade act or deal in so as to either or indirectly provides that he
any way directly
trade act or deal
is not to
in
affect Edward Davies and Edward Albert Davies Mr Barber did
any way so as to either
directly or
affect Edward Davies indirectly
or Edward Albert Davies
not argue the point because he thought it was covered by pre Now with regard to the first
part that he
vious decision of the Court of Appeal but in my opinion there shall retire from the
partnership there is no question that that
is one great objection to enforcing this covenant that do uot is both
which be covenant
may made
think it is covenant the benefit of which would with the lawfully and that it has been
pass the performed in
present instance The
the purchasers the company The which he difficulty arises with
goodwill to case to
two further regard to the
parts of the covenant which
referred was case where there was contract not to trade within have endeavoured to
divide and will take them
certain limits That was evidently covenant in order to protect separately First with
the regard to
provision that so far as the law allows
and he
the business the goodwill of it and therefore it was one which
undertake to
shall
retire or
retire from the trade
would with the goodwill to of the but or business
pass purchaser goodwill thereof in all its
branches at first that
sight would
there is no such absolute covenant here and to my mind it is

bcequivai
appear.__and think it must
to covenant either to retire
covenant which to the personal benefit of the father and of
points trade absolutely from the
altogether if the law allows
the half-brother rather than to of the such covenant to
any protection goodwill if be made or
the law does not allow such
covenant to be
So far as the parties intended the goodwill was defended by the made it must be
covenant lo undertake to retire from the
previous coveuant in restraint of trade tb ich in
my opinion was trade so far as the law
permits of such an
addi nndertaking If be
an invalid covenant and this could not be intended as an it is to construed in the
first of those two ways covenant
tion to that which in their minds was absolutely provided for but absolntely to retire
from the altogether
trade or
business it seems
as something which the son should covenant for the benefit of to me to be against the
Common Law for this
reason The
his father and half-brother personally and not that which was to
that
principle of the Common Law
covenants in restraint
of trade which
the trade which he had parted with to them In are unlimited
affect my opinion whether in altogether
space or time is that such
having regard to the great indefiniteness of this covenant and to covenan are void
cannot be enforced They
That was laid down
the fact not one which as
that it is the purchasers from the surviving Book long ago as the Year
of Hen which was followed
would be entitled to to them with the in the
son say passed goodwill and reign of
which is Elizabeth
alluded to in the Ip8wich
relief to be on that branch of the covenant Tailors Case
no ought granted what This is
the Court
says in the
In therefore the action and ought to .Tpswieh Tailors Case
either my opinion fails that at
Common Law the
no man could be prohibited
be dismissed from in
Iawf working any
trade for these
reasons that it is
Jacoby Whitmore 32 18 according to the wjsh of
11 Rep 54a
VOL XXXVI
 DIVISION XXXVI VOL XXX VIj CRANCERY DIVISION 391
JIANOERY

lawfui trades and Now we have been asked by Mr Warminyton in an extremely

that all should learn and practise
the law
and therefore cable argument first of all to hold that limitation in is not 1887
to the commonwealth space
sciences which are profitable
1857
which any from necessary
if
you can find that protection through an unlimited Davxgs
prohibit
the Common Law abhors all monopolies
DAVIES
Court to con area of is reasonably for the security of the
trade Then the proceeds space necessary
working in any lawful
DAVIES that for the same reason covenantee But Mr Warmington has not confined himself to
sider the case in Hen and they say Bowen L.3
Bowen L.J not sow his land
the bond that minor proposition he has also gone further and asked us to
bound that he shall
if husbandman is

the statute of Elizabeth consider generally whether the state of circumstances the change
is against
the Common Law and that

crafts or in the character of the business of the world the extensiqn of

from using or exercising
which prohibits every person
was enacted not the means of intercourse between one part
of the kingdom and
have been apprenticed
occupations until they
the intent of en another and one part of the world and another has not shaken to
trade but with
the intent of preventing
with
trade Therefore says
the Court it its core the original doctrine that covenants unlimited altogether
education in
couraging
none can be in any ought not to be enforced It
appears to me that if there is
an Act of Parliament
that without
appears made
lawful trade That lan to be any change in the principle of the Common Law
from working in any
manner restrained
reference to the subject- to which have alluded and which has remained unassailed
taken with
of course must be
guage would better come from the House of Lords
that broadly the law sets its for centuries it
use as shewing
matter but still it

shall have to consider against than from ourselves but if there is to be an exception engrafted
which
face subject to exceptions
Reynolds on the rule or the rule is to be modified with reference to the
of trade That is laid down in Mitehel
restraints
foundation of the recent requirements of modern society as to which will for the moment
be said to be the
case which may
express no opinion it can only be if the case in question ranges
decisions upon the point
found in the covenants on itself under one of two heads either that the covenant in its
be limitations to be
Now there may
this unrestricted form was one which was benefit to the public in
to front general
which it is sought escape
the strength of
has also been which case it might be said that that would destroy the reason
There be such limits in time and it
doctrine may for on the old rule which was derived from the
limit in time is not indispensable insisting public
of the Courts that
the view
to be enforced where there is
policy
of the kingdom or secondly if it was reasonably neces
enable the covenant
in order to
reason for the protection of the covenantee In the present case it
to be foaind which makes thecovenant sary
some other limit
seems to me that we have no upon which we can
party who
the seeks to got materials
of
able and necessary for the protection
further Then without leaping in the dark assume that the present covenant is
need not discuss
himself and those cases
protect
another limit which may be found limit in space benefit to the public for there is nothing to my mind which
we come to
decision that shews that the public would be benefited by allowing such
there has been no you
and as think that
yet
in unless in the covenant as this in this case to be enforced nor have we the
have covenant unlimited space altogether
may
the third class of limitthe .materials for
deciding that such covenant is reasonably neces
limits which form
case of special
of the subject- sary even for the protection of the covenantee It there
found in the special character appears
limit which is to be
The last or third kind fore to me that it is not necessary in the present caSe to consider
be protected
matter which is sought to
Vice-Chancellor James or to decide whether what have called the old doctrine of the
limit which think
of is kind of
limit
Cloth Conipamy Common Law that covenants absolutely unlimited both in
in the case of Leather space
thought he had found
Justice has and in time to be to the altered
also as the LoTd ought modified having regard
in that case
Loreont though
have been found limitation in time character of the commercial intercourse of the world We ought
also
pointed out there may
to leave that to be discussed on an occasion when the facts
Wms 181 Law Rep Eq 345 really

2D2
 CHANCERY DIVISION XXX VI VOL XXXVL CHANCERY DIVISION
393
raise the point For the same reason it
appears to me that we of fixing the particular time for payment
1887 are not bound in the present instance to decide even that an
provides that the time aa
is to be fixed by what is reasonable in the trade or in the business 1887
DAv8 absence limit be excused be
of as to space may or may excepted In those cases you introduce the consideration of what measure
if it is for the protection of the covenantee DAviEs
reasonably necessary will
DAVIES reason apply because the measure which reason will apply
because there is nothing here which shews that it was reasonably tends towards certainty Dsvms
Bowen L.J and therefore enables you to make
up for
necessary for the protection of the covenantee For that reason the absence of Bowen L.J
distinctness on the of the
part contract by refer
without lenying that have an inclination to think that the rule
ence to standard which the parties had in their minds though
of the Common Law is too much ingrained in our history to be did not express
they it on paper namely the standard of reason
changed at this moment at all events except by the highest But in the present case what we are in search of is some definition
Court in the country do not decide it because it seems to me which would limit what otherwise is pure negative In such
the materials do not enable us to decide it If therefore the
case as that you cannot invoke reason to put limit
upon mere
part of the covenant which am now discussing which is that You
negative cannot get measure out of it at all and whatever
James Davies is to retire so far as the law allows from the trade or reason about
says it
you remain still in want of the definition
business iq all its branches is to be interpreted as meaning an which necessary to make
is the covenant restricted one The most
absolnte covenant and we are asked to hold that the law will
obvious proof of the truth of that
proposition is to recall to ones
allow in such case such covenant to be made say there are mind this that the law will
supposing allow certain
restrictions
no materials here to which we conld to apply the modir
attempt there
may be twenty different restrictions all of which might serve
fication of the general principle which Air Warmingtom asks us to the
purpose of the parties all of which would be absolutely in
accept of the old rule of the Common Law consistent with each other all of which the law would allow
But then if we are to read on the other hand this branch of the How are we to know which of those particular restrictions the
covenant as something short of thatif it only means that the
intended to
parties impose They leave it absolutely uncertain
covenant in restraint of trade is not to be unlimited but that the and for the best of all
reasons because they had not made
be found up
limit is to by an appeal to the law then it seems to me their own minds Therefore to ask us to reason at
apply this
that the obvious answer is that that covenant is too for us
vague particular point is to ask us to condescend upon some one of the
to deal with think myself it would have been too even
vague twenty possible alternatives though the parties themselves could
if it had remained in the nature of an executory contract to execute not make up their minds which one they would take contract
deed in that shape The parties would still be asking the law
to do
nothing that is unreasonable contains in itself no limitation
to do for them what they had not made up their minds about hecanse there
may be hundred different reesonnble courses
themselves In fact they would be the law to make
asking all of which are inconsistent with one another The law of
contract instead of making contract themselves But in any Rnyland allows man to contract for his labour or allows him to
view it seems to me that this is too vague It is said that this
himself in
place the service of but
master it does not allow
covenant that James Davies will retire so as the law allows
far him to attach to his contract of service servile incidents
and ask the law what any
that we are to is to be the restraint imposed any elements of servitude as distinguished from service What
upon the generality of the covenant The law is absolutely in sort of
position would contracting party place the Court in
of answering so It that
capable question put is perfectly true who mh4e this sort of contract for himself will undertake to
in many where
contracts you want measure to be applied to
serve you in
every possible way which the law does not
consider
subject-matter leave the measure to be
particular you supplied
repugnant to the doctrine that servile incidents are not to be
by reason There is instead
many contract for example which imposed upon party That is too
vague It gives no
you

.14
 CHMTOERY DIVISION XXXVL VOL XXXVL ORANGERY DIVISION
39L

sort of measure of service In the same contracts in

way restraint
FRY L.J
1887 of marriage are void except in certain specified cases where for
Tn this case we are called to enforce
definite for the sake of the upon by way of 1887
instance period is imposed health injunction
and by assessment of damages covenant contained
of one of the parties Row could man contract that he never in an exe DAVIES
Dsv12s cuted contract. We have not before us an
would marry subject always to such limitations as the law imposed agreement which is DAVIES
Bowen 14 intended to be afterwards
developed into deed but we have
It would leave the contract absolutely vague You would not
solemn and formal deed executed between the
know what he meant For the same reason if
you read this con parties which
contains this covenant We are told
and have no doubt
tract in the secondary sense as an attempt to make contract in with
perfect truth that the history of it is thisthat
restraint of trade the answer is we do not know what the the formal
partial
covenant which we have to construe was
parties mean On that ground it seems to me that that
part of part of an earlier execu
tory and informal and
contract that the to
the contract cannot be enforced parties it not being
able to that
develop contract
Then we come to the third branch of the covenant that satisfactorily between themselves
lastly
inserted in the formal instrument the
James Davies is not to trade act or deal in
any way so as to very words which they had
used in the informal one
either directly or indirectly affect whom Edward Davies
the covenant in
That does not enable us to construe
any manner other than as formal and an
and Edward Albert Davies doubt myself if that contract is exe
cuted contract
not in restraint of tradeif it is not an absolutely unrestricted
The covenant consists of three
trade in one view parts It
covenant in restraint of
put upon it and if so
Davies is
is first that James
to retire and
wholly from the
think it is bad for the same reason as said before with regard absolutely partnership
With regard to that no question arises
to the earlier branch of the covenant But to read it in less Secondly James Davies
is to retire thus
for read it
offensive or less rigid way suppose it to mean not to trade act or
so far as the law allows from
the trade or business thereof that
Edward Davies is of the
deal in any way so as to affect and Edward Albert partnership in all
its
branches and thirdly James Davies is
me not to
Davies in their business it is covenant that seems to to trade act or
deal in
any way so as to either or
be personal to Edward Davies and Edward Albert Davies and directly indirectly affect
Edward Davies and Edward Albert Davies deal
cannot be It is true that there is class of first with the
assigned perfectly
second branch of that covenant__that James Davies
covenant in restraint of trade which would affect established will so far as
the law allows retire from the trade and business of the
businesses which can be assigned For instance covenant not partner
ship in all its branches think that
on business in covenant is too
to carry particular street or in particular town be vague to
enforced think the object of the
by assignment to the assignee of the but contracting was
may pass business if
to leave
parties
the law to make the
the contract in its nature on its true construction is personal
contract between them think
that it is the function of the Courts of Law
cannot be to
one then it assigned The rule of law is plain you interpret contracts
to
say whether contract is is
or not reasonable
cannot to
assign the benefit of covenants which are purely personal say whether it
is
or is not void but that it is not the
think this and therefore duty of the Courts to make
purely personal covenant it cannot
contracts between parties Whether the words would be capable
be assigned and cannot be enforced by the present Plaintiffs of
development if the Court had directed an
On these grounds it seems to me with regret that we must instrument to be
executed to them into
carry effect
differ from Mr Justice Kekewiels As said before as far as
is point upon which need
not
express any decided opinion entertain the greatest
am concerned leave undisbussed and unsettled the great ques doubt
ahether the Court
could possibly be called
how far modern old upon to such
tion as to changes in commerce affect the interpret
words The reason
why come to the conclusion
doctrine of the Common Law have stated
is
this that whatever else
may be in doubt about dontracts in
 CHANCERY DIVISION IVOL XXXVI VOL XXX VI CHANCERY DIVISION

restraint of trade this is plain

and undisputedthat no contract .contracts which at one time were deemedand dare say justly

in restraint of trade which is unreasonable which is larger than is deemedto be contrary to public policy at another time have been 1887
1887

the interests of contracting parties is good deemed to be consistent with public policy and for the public
necessary to protect DAviEs
Dsvxzs

me that there may be hundred forms of con benefit forcible illustration of that fact is furnished by the very
DArns
Now it appears to Dsvns
and might therefore be which is the foundation of this branch of the law the case in
tract each of which might be reasonable ease
Fry LI
Pry L.J
good but that the law cannot select which of those hundred is lIen which excited the indignation of Mr Justice Hull in

contract between the Let me assume for one manner which has made his name immortal in the books As
to be the parties

the case that it is in order to has been pointed out by Lord St Leonccrds the general
moment as is probably necessary principle

make this contract reasonable that there should be some limit that contract in restraint of trade which is unreasonable is void
or the the law but the particular
in space Is Wales to be left out or the eastern counties is still conclusion at which the Judge

counties or the northern cotinties No human being arrivedthat that particular contract was against public policy
southern

tell That is matter which ought to have been settled is

entirely at variance with modern decisions What Lord St
can
So again limit of time be Leenards said in Earl Brownlow
between the contracting parties if Egertou was this Angry
order to make the contract reasonable the Court .as the learned Judge was at that infraction of the law what has
necessary iu
down what length of time is When the been the result of that
very rule without statute intervening
cannot lay requisite any
to the contract have settled all those matters between That the Common Law as it is called has adapted itself upon
parties
attend to the suggestions of those of to different and limited
themselves then the Court can grounds public policy totally rule

who at all the of the contract the that would guide us at this day and the condition which was
say that looking particulars

that the substance of then so denounced is as condition now as

contract is or is not unreasonable repeat strongly just good

the document seems to me to throw upon the Court the making of

any that was ever inserted in contract because partial restraint

the For that reason think it created in that with object now
the contract between parties way particular is perfectly

is too vague to be enforced legal Without any exclamation of the Judge and without any
which have stated without of of this realm sue upon such
have come to the conclusion danger prison any subject may
reference to the larger question which has been so much debated condition as Mr Justice Hull was so very indignant at in that

in the course of this argument but which in my judgment does particular case The same observation applies to the case of

th occasion There with more or less force because

adjudication from us on
not require present Jluitchel
.Thnjnolds although

it think case sound as

any decided
that is its
shall not express opinion upon certainly perfectly regards great principle
fore
that should add that the that contracts in restraint of trade which are unneces
however that it is not unreasonable namely

mind still in the direction in which it was large are void yet there can be no doubt that that decision
inclination of my is .sarily

of Rousillon .Rousillom think that has been more or less affected by the course of the law since In
when decided the case
considered the adequacy the considera
very different
is one of that case it was that of
the law with regard to public policy

from the law which is laid down in absolute terms tion was matter to .be investigated by the Court The Courts
description

for all time It would be strauge and think it would be unreason have since
repudiated their capacity to investigate that point

the public benefit were The law laid down in that ease created of inva
able if contract which might now be for as presumption

the reign of or in the reign as the contract That burden of

proof has since
held to be void because in Hevtry lidity against

was contrary to public policy It is been shifted as soon as it has been shewn that the contract has
of Elizabeth that contract

look at the of the law and not to see that

impossible to history Hen Term Pasch p1 26 238

14 Cli 351 Wins 181 193

 DIVISION EVOL XXXVI. VOL XXXVI CHANCERY DIVISION 399
CHANCERY

one James Davies was son by the first marriage of Edward

entered into for the protection of the interest of of the parties
been
that case Davies Edward Davies was carrying on the business with his 1887
and therefore repeat although
1887 contracting parties
the law the law has grown younger son Edward Albert Davies The assignment of the Dsvas
in its broad features is still undoubtedly
Dtvmis
be but it to me that the goodwill had as was pointed out by Mr Warmington an im Dsvms
since that case may wrong appears
DAvns
was said that the condition must plied
covenant for quiet enjoyment of the goodwill We have
on which in that case it IS
ground
L.r
by the learned therefore before we arrive at this covenant an implied covenant
point of space was
be in clearly expressed
partial
to man to for quiet enjoyment of the goodwill covenant to retire from
he It can never be useful any
Judge when said
the business covenant to retire from every branch of the same
restrain another from trading in all places though it may be to

he intends business which the partnership carried on Now the covenant

restrain him from trading in some unless monopoly
for has not been sued therefore we have
which is crime The Judge who decided that case seems quiet enjoyment upon
could never be not to consider it except for the of construction but
that total restraint purpose
therefore to have thought
If he am bound to give to this last covenant some real meaning in
the of the parties was wrong in
necessary for protection
covenants
inquiry how
it would be matter for future far addition to all the previous think therefore that it
that assumption
he created or imposed on that ground is or is not is something more than retiring from the business of the partner
the limit which

the Courts at the present day should not have ship and not carrying on any branch of the same business
binding on
had that learned Brethren think that popularly speaking it means this that as long as
made these observations it not been my
without the father and the half-brother are connected together James
desirable to their views giving
have thought it express

decision on this
Davies will not in
any way annoy or interfere with them but
any point
think that it is contract not relating to the business only bat
L.J meant to decide the question

think the inquiry

relating to the two Davieses so long as they have any common
desire not to decide it but to say that is

interest think it is therefore one which does not with

pass
and of consideration
still one which is open worthy great
the business and which cannot be broken after the death of
shall come up for decision before the Courts What
whenever it
Edward Davies
mean to indicate is this that am not convinced that there
But further than desire to the contract
not
that say that appears
of limitation that the contract shall
is any other rule except
me to be couched in such doubtful
then
to
vague terms ani words
be unreasonably large If it be more than reasonably large
that think it can be enforced neither at Law nor in Equity
to the
it tends to monopoly without any corresponding good
Mr Warmington who undoubtedly felt the difficulty in the way
the other hand it be not larger than is reasonable
parties If on
that
asked us to separate the words directly and indirectly and
to me that it would be remarkable something
it still seems
to hold if the covenant could not be enforced with to
would regard
shouldbe on the contract so that the contract
else imposed
conduct having an indirect effect on the Davieses that it might
be to be not only reasonable but something more
required with But that
regard to direct effect construction is not open
to
incline to think that reasonable contract ought
rather every in this case because those words either directly or indirectly
be enforced
are only an amplification or explanation of the affirmative words
Then leaving these observations which after all are only by
in any way Therefore we have contract not to trade in any
come to the last branch of the contract
the way in my decision
way to affect the two Davieses not to act in any way to affect
which is that James Davies is not to trade act or deal in any way
themnot to deal in any way to affect them think that no
affect Edward Davies and
either or indirectly
so as to directly
such
vague and general covenant which is not even in terms con
Edward Albert Davies In order to construe those words we most
fined to injurious affection could be enforced
to the of things between the contracting
have regard position