for not The reasons against allowing agreements in unlimited restraint Reasons of trade are set forth at large in the leading case of Mitchel v. allowing Reynolds (u), and at a more recent date (1837) were put some- general what more concisely by the Supreme Court of Massachusetts, who held a bond void which was conditioned that the obligor should never carry on or be concerned in iron founding : "1. Such contracts injure the parties making them, because they diminish their means of procuring livelihoods and a competency for their families. They tempt improvident persons for the sake of gain to deprive themselves of the power to make future acquisitions. And they expose such persons to imposition and oppression. 2. They tend to deprive the public of the services of men in the employments and capacities in which they may be most useful to the community as well as themselves. 3. They discourage industry and enterprise, and diminish the products of ingenuity and skill. 4. They prevent competition and enhance prices. 5. They expose the public to all the evils of monopoly” (b). The second and fifth of these reasons appear to be the strongest and really efficient ones in themselves and to have been so as a matter of history. The first might be applied to almost any bad bargain, and the third and fourth, so far as really admissible, are only partial statements of the fifth. restraint. restraint. The admission of limited restraints is commonly spoken of For allowas an exception to the general policy of the law. But it seems ing partial better to regard it rather as another branch of it. Public policy requires on the one hand that a man shall not by contract deprive himself or the state of his labour skill or talent; and on the other hand, that he shall be able to preclude himself from competing with particular persons so far as necessary to obtain the best price for his business or knowledge, when he chooses to sell it. Restriction which is reasonable for the protection of the parties in such a case is allowed by the very same policy that forbids restrictions generally, and for the like reasons (c). as to It has been suggested by a learned American writer that in its Questions origin the doctrine was founded on a much more obvious and historical immediate inconvenience than can be now assigned as the con- origin of (a) 1 P. Wms. 181,1 Sm. L. C. 356. (b) Alger v. Thacker, 19 Pick. 51, 54. (c) James, V.-C. Leather Cloth Co. v. Lorsont, 9 Eq. 345, 353. the doc. trine. sequence of allowing these contracts. It dates from the time when a man could not lawfully exercise any trade to which he had not been duly apprenticed and admitted: so that if he covenanted not to exercise his own trade, he practically covenanted to exercise none-in other words not to earn his living at all (4). One might even go a step farther: for by the statute 5 Eliz. c. 4 (since repealed in some particulars) (b) which consolidated earlier Acts of the same kind, not only the common labourer, but the artificer in any one of various trades, was— and apparently still is-compellable to serve in his trade if unmarried or under the age of 30 years, and not a forty-shilling freeholder or copyholder or "worth of his own goods the clear value of ten pounds." An agreement by a person within the statute not to exercise his own trade might therefore be deemed, at any rate if unlimited, to amount to an agreement to omit a Absolute legal duty-which of course is positively illegal. But it must not be forgotten that absolute freedom of trade is positively asserted as the normal state of things always assumed and upheld by the common law; wherefore it may be doubted if any artificial explanation is wanted. It was resolved in the Ipswich Tailors' case (c) that at the common law no man could be prohibited from working in any lawful trade and it was said that freedom of trade asserted by Coke as old common law. "The stat. of 5 Eliz. 4, which prohibits every person from using or exercising any craft mystery or occupation, unless he has been an apprentice by the space of seven years, was not enacted only to the intent that workmen should be skilful, but also that youth should not be nourished in idleness, but brought up and educated in lawful sciences and trades: and thereby it appears, that without an act of parliament (d) none can be prohibited from working in any lawful trade." And certain ordinances, by which the tailors of Ipswich forbade any one to exercise the trade of a tailor there until he had presented himself to the master and wardens and satisfied them of his qualification, were held void, inasmuch as "Ordinances for the good order and government of men of trades and mysteries are good, but not to restrain any one in his lawful mystery" (e). (a) Parsons on Contracts, 2. 255. noted in the Revised Statutes. (c) 11 Co. Rep. 53a, 54b. (d) So again in the case of Monopolies, ib. 87 b. (e) Cp. the case of the Clothworkers' Co. mentioned ib. 86b. restraint It seems certain that partial restraints were recognized as valid Partial at an early time. This appears from the Dyer's case in 2 H. 5 held good (Pasch., fo. 5, pl. 26), which has been sometimes misunderstood, in 2 H. 5. The action was debt on a bond conditioned that the defendant should not use his craft of a dyer in the same town with the plaintiff for half a year: a contract which would now be clearly good if made upon valuable consideration. The defence was that the condition had been performed. To this Hull, J. said: "To my mind you might have demurred to him that the obligation is void, because the condition is against the Common Law ; and per Dieu (a) if the plaintiff' were here he should go to prison till he had made fine to the King." But it does not appear that this dictum met with assent at the time, and the parties proceeded to issue on the question whether the condition had in fact been performed or not. Hull's opinion however was approved Contra in by all the Justices of the C. P. in a blacksmith's case in 29 Eliz. 29 Eliz., of which we have two reports (b). It does not appear in either case what was the real occasion or consideration of the contract; very possibly the Courts thought it out of the question, when they had an instrument under seal before them, to listen to or look at anything outside the contents of the deed itself. For aught the reports show it may well have been, and not improbably was, the ordinary transaction of a sale of good-will or the like in both the dyer's and the blacksmith's case. semble. The contracts in partial restraint of trade which occur in modern Contracts books are chiefly of the following kinds: in partial restraint Agreements by the seller of a business not to compete with in modern the buyer. Agreements by a partner or retiring partner not to compete with the firm. Agreements by a servant or agent not to compete with his master or employer after his time of service or employment is over. It by no means follows, however, that an agreement in partial restraint of trade must fall within one of these descrip tions in order to be valid. (a) This expletive is not unique in the Year Books nor is it, at that date, altogether conclusive (as modern writers assume) to show that (b) Moore 242, pl. 379, 2 Leo. 210. times. Rules as to their validity. Of the rule The rule established by the modern decisions is in effect as follows: An agreement not to carry on a particular trade or business is (i) It must be founded on a valuable consideration. (iii) And the restriction must not otherwise go beyond what : It was at one time thought that the consideration must be not only valuable but adequate but it is now clearly settled that this class of contracts forms no exception to the general rule. Here as elsewhere the Court will not inquire into the adequacy of the consideration. It is enough if a legal consideration of any value, however small, be shown (). On the other hand the necessity of showing some consideration is not dispensed with, or the burden of proof shifted, by the contract being under seal. It has been doubted in one recent case whether the term as to as to limits limits of space (ii) is absolute, or liable to qualification by special (a) See per Selwyn, L. J. Catt v. Tourle, 4 Ch. 659; and Leather Cloth Co. v. Lorsont, 9 Eq. 349, Allsopp v. Wheatcroft, 15 Eq. 61 (arg.) (b) Hitchcock v. Coker, 6 Ad. & E. 438 (Ex. Ch.) which also settles that a limit in time is not indispensable; (c) Leather Cloth Co. v. Lorsont, 9 (d) 9 Eq. 354-5, cp. remarks in 1 machinery bound himself during the term of the licence (without any express limit as to space, but it seems to have been taken as confined by the context to England) not to make or sell any machines of the specified kind not fitted with the patent here the restriction was held reasonable, as being only co-extensive with the privilege. Again it is the constant practice for a partner to bind himself absolutely not to compete with the firm during the partnership: and so may a servant in a trade bind himself absolutely not to compete with his master during the service, however long that may last (a). On the whole therefore the general rule seems to stand, but subject to definite exceptions which may be given thus: contracts service, or (iv) An agreement not to carry on a particular business may It doe: not be good though not limited as to space, if incident to a contract apply to of partnership or service in the same business and limited to the of partnership or duration of the partnership or service (and to business done otherwise than on behalf of the firm or employer (b)), or if for the prenecessarily incident to a contract by the vendor of a business of a trade not to divulge the means or processes of that business to any secret. person other than the purchaser. servation At all events the restriction must in the particular case be General reasonable, and this is a question not of fact but of law. What reasonable. ness of amounts of restriction have been held reasonable or not for restricti n in psrthe circumstances of different kinds of business is best seen in the tabular statement of cases (down to 1854) subjoined to the cases. report of Avery v. Langford (c). It may be convenient to add the later decisions in the same form. (a) Wallis v. Day, 2 M. & W. 273. (b) These words are added merely for the sake of verbal accuracy, and are perhaps unnecessary. (c) Kay 667. Note that Wallis v. Day, 2 M. & W. 273, did not decide that a covenant unlimited in space was enforceable, but only that ticular Þ |