Restraint of Trade

Restraint of Trade

Restraint of trade refers to any agreement, practice or conduct that restricts or limits the ability of individuals or businesses to carry out trade or competition in a particular market or industry. The term can refer to a wide range of activities, including price fixing, market allocation, exclusive dealing, and non-compete clauses in employment contracts.

In many jurisdictions, including the UK, restraint of trade is generally regarded as contrary to public policy and therefore unenforceable. This means that contracts or agreements that seek to restrict or limit competition in any way are generally invalid and unenforceable.

However, there are some exceptions to this general rule. For example, non-compete clauses in employment contracts may be enforceable if they are reasonable and necessary to protect the legitimate interests of the employer. This may include protecting confidential information or trade secrets, or preventing an employee from poaching clients or customers after leaving the company.

In addition, some forms of restraint of trade may be permitted if they are specifically authorised by law. For example, certain types of intellectual property rights, such as patents and trademarks, may limit competition by granting exclusive rights to use or sell certain products or services.

Restraint of trade is a complex area of law, and whether a particular agreement or practice is enforceable will depend on a range of factors, including the nature of the restraint, the specific circumstances of the case, and the relevant legal framework.
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