Some agreements are simply detrimental to society. They are contrary to public order. Some of these agreements are agreements restricting marriage, trade or legal proceedings. These agreements are expressly set aside in sections 26, 27 and 28 of the Indian Contracts Act. This was followed by Broad v Jolyffe[5] and Mitchel v Reynolds[6], where Lord Macclesfield asked: “What does it mean for a trader in London what another does in Newcastle?” At a time when communication and trade are so slow throughout the country, it seemed obvious that a general restriction served no legitimate purpose for one`s own business and should be null and void. But as early as 1880 Lord Justice Fry stated in Roussillon v. Roussillon[7] that an unlimited restriction in space need not be null and void, since the real question was whether it went beyond what was necessary to protect the promisor. For example, Lord Macnaghten ruled in the Nordenfelt case[2] that while one could legitimately promise “not to produce weapons or ammunition anywhere in the world”, it was an unreasonable restriction “not to compete in any way with Maxim”. This approach in England was confirmed by the House of Lords in Mason v The Provident Supply and Clothing Co. [8] Importance of goodwill: – There should be real goodwill to sell. The goodwill that was the subject of the sale is nothing more than the probability that the former customer will fall back on the old square. Section 27 of the Indian Contracts Act cancels all pro tanto trade restriction agreements, with the sole exception of the sale of goodwill.
However, it is important to understand that these agreements are null and void and not illegal. That is, these agreements are not illegal, they are simply not enforceable in court if one of the parties does not perform its part of the agreement. Unlike the common law, even partial agreements restricting trade or reasonable restrictions under the Contracts Act are not valid. Section 27 of the Indian Contract Act, 1872: Trade Restriction Agreement, Void Any agreement preventing a person from carrying on a lawful profession, trade or enterprise of any kind is void in this regard. The agreement on the provision of services that contain negative agreements serves to prevent the employee from working anywhere during the period covered by the agreement. Nowadays, trade secrets are the main point of contention for negative alliances. Employers want to protect their trade secrets because employment contracts with negative commitments are usually used. Agreements to protect confidentiality and trade secrets are not unilateral, unfair or inappropriate. Any violation of these clauses by the employee may be treated as misconduct. Lowe v.
Peers set a precedent in the Marriage Restriction Act. In the present case, the defendant claimed that if he married someone other than the plaintiff, he would give her £1,000 within three months of her marriage. It has been decided that such an agreement is null and void. In this case, the parties were businessmen in Kolkata. The defendant Rajcoomar suffered prejudice as a result of the plaintiff`s competition and entered into an agreement with the plaintiff that, if he closed his business there, he would pay him all the advances he had made to his workers. Where the defendant failed to pay, the plaintiff brought an action for recovery of the amount, but did not do so because it was an agreement restricting trade, which was therefore unenforceable in court. The law commission`s original draft did not contain any provisions on trade restrictions. But the provision of Article 27 was introduced later at the time of the decree, the main objective being to protect trade in India. In its thirteenth report,2 the Law Commission had recommended that the provision be amended appropriately to allow for such restrictions and all contracts of general or partial restriction of trade in the interest of the parties and the public. However, nothing has been done against this recommendation.
In Superintendence Co. of India (P) Ltd.c. Krishan Murgai,14 the Supreme Court also confirmed that any negative agreement beyond separation is void. The Court held that one of the principles is that a gentleman does not have the right to prevent his servant from offering competition after the end of the employment relationship, but that he is entitled to adequate protection against the exploitation of trade secrets. In Mason v. Provident Clothing Co did not allow the House of Lords to detain its advertiser for a period of three years after the end of his service. Viscount HALDANE LC stressed that the possibility of soliciting customers is a natural gift and is not due to special training of the employer. .
