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Agreement in Restraint of Trade

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Submitted By mriganki
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------------------------------------------------- AGREEMENT IN RESTRAINT OF TRADE CONTRACTS











Agreement in restraint of trade is defined as the one in which a party agrees with any other party to restrict his liberty in the present or the future to carry on a specified trade or profession with other persons not parties to the contract without the express permission of the latter party in such a manner as he chooses. In other words “one in which a party agrees with any other party to restrict his liberty in the future to carry on trade with other persons who are not parties to the contract in such a manner as he chooses”.


This research work deals with an area of law which under classical contract theory brought two principles into direct conflict. On the one hand, classical theory endeavoured to promote ‘freedom of contract’ – it is the parties who determine their obligations, and the courts should only intervene in exceptional circumstances. On the other, underlying classical theory was an acceptance that the ‘free market’, in which competition takes place between those seeking to make contracts, is the ideal economic framework for the operation of exchange transactions. What happens when the freedom to contract is used to restrict competition? The answer of…...

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