SEMINAR ON LAW OF CONTRACT

Name : KHUSHI
Roll No. :8
1st SEMESTER
BA LLB(HONS.)
KURUKSHETRA UNIVERSITY,
KURUKSHETRA
TOPIC : AGREEMENT TO
RESTRAINT OF TRADE WITH
EXCEPTIONS
INDEX
1.MEANING
2.DEFINATION
3.EXCEPTION(resaonable
restriction)
WITH CASE LAWS
4.CONCLUSION
 MEANING
To restrict OR to prohibit someone to do any
trade, business or any legal profession.
But every person in india is free
to carry on any lawful busniess,trade or engage in
any profession.This freedom has been guranteed
to every citizen by the constitution of India.
The Right of Trade and profession is as
important as the Right of the life.Just as a
person does not have a right to deprieve
himself of his life.Similarly,he cannot deprieve
himself of the right of trade and profession.An
agreement,which puts restraint upon party's
freedom of trade and profession shall not be
enforceable.
 DEFINATION
-Every Agreement by which any one is
restrained from exercising a lawful
profession,trade or busniess of any kind,is to
that extend Void
-Every agreement by ehich any one is
restrained from exercising a lawful
profession,trade or busniess of any kind,it to
that extend VOID.
 EXCEPTION(Reasonable restriction)

The General rule is that all the agreements

in restraint of trade,are
Void.However,following are tge exception to
the above general rule.
1.Sale of Goodwill
2.Partners Agreements
3.Trade combinations
4.Sole selling Agreements
5.Service Agreements
 Sale of Goodwill

Acc. to section 27,one who sells the goodwill of a

busniess may agree with the buyer to refrain from
carrying on a similar busniess,wuthin specified local
limits,so long as the buyer or any person deriving
title to the goodwill from him,carries on a like
business therein.Provided that such limits appear to
the court reasonabl,regard being had to the nature
of the business
 PARTNERS AGREEMENT

Partners may agree that, A partner shall not carry on

any business,other than that of the firm, while being
partner.A partner on ceasing to be a partner will not
carry on any business, similar to that of the firm
within a specified period or within local limits,The
Agreement shall be Valid if the restriction are
reasonable
Partners may in anticipation of dissolution
make an Agreement that some or all of
them will not carry on a business similar to
that of the firm within a specified period or
within local limits and such,agreement shall
be Valid if the restriction imposed are
reasonable.
A partner may, upon sale of goodwill of a
firm,make an Agreement such that partner will
not carry on any business similar to that of the
firm within specified periods or local limits
provided the restriction is reasonable.
 TRADE COMBINATION

Trade combination which have been formed to

regulate the business or to fix prices are not
Void,but the trade combination which tend to
create monoply and which are against the
public intrest are Void.Eg. An agreement
between certain person to carry on business
with the members of their caste only is Void.
 SOLE SELLING
AGREEMENTS
There is a usual practise among manufacturer that
they give right yo only one agent or distributor to sell
their products in a particular local limit so long as tge
buyer or his representatives carry on the busniess is
Valid.But restrictionshould be reasonable in the
opinion of the court.
 SERVICE AGREEMENT

The Agreement between an employer and the

employee may contain certain term which
put restriction upon employee's
freedom.Some of such restriction may be
valid.A promise by an employee that he will
not work anywhere else so long as he is
working wirh thepresent employer would be
valid.