An Agreement In Restraint Of Trade Is Void. Discuss The Statement Giving Exceptions To It If Any
Part XIII of the Indian Constitution contains provisions relating to freedom of trade, trade and sexual relations in the territory of India. The provisions are set in sections 301-307. Just as the legislature cannot take away individual commercial freedom, the individual cannot exchange it by mutual agreement. “The principle of the law is that public order requires that each person be free to work for himself and that he is not free to deprive himself of his know-how, his talent through any contract he enters. The meaning of Section 27 is therefore as clear as any agreement by which a person is deterred from practising a legitimate profession, commercial or commercial activity, to the extent that it is non-acute. In this case, the Supreme Court found that section 27 could not be explicitly set aside for all agreements (except one exception) and that there were no two meanings to be attributed to the section. The vulnerability test in England cannot be applied in India. Since the agreement to sell all products to a particular party, provided that the purchaser is required to accept the full amount, was valid because it was intended to promote the transaction and did not retain it (Mackenzie vs. Striramiah). However, if, in a similar agreement, the purchaser was free to refuse the goods (i.e. he was not required to accept the full amount proposed), it was found that the agreement was non-stretchable because it was subject to trade restrictions (Sheikh Kalu vs.
Ram Saran). (a) an agreement between the partners that a partner does not engage in activities other than those of the company while it is a partner [section 11, paragraph 2, of the Partnerships Act], 4) Any partner can; reach an agreement with the buyer when selling the good inside or good inside of a business, so that that ori partner does not have a business similar to that of the company within a specified time frame or within certain local limits. A service agreement by which a person commits during the terms of the contract to not take any service with anyone else is not within the restriction of the legal profession and is valid. For example, an accountant employed in a com may be excluded from private practice or otherwise during the service portfolio (Maganlal vs. Ambica Mills Ltd.). However, a service agreement to restrict professional freedom for a certain period of time after termination of service is null and void. For example, Brahmputra Tea Co. Assam was agreed not to care for himself within 40 miles of Assam for a period of five years from the end of his service or to engage in a similar venture (Brahmputra Tea Co. vs. Scarth). However, agreements that simply restrict the freedom of action necessary to carry out the activity are not null and void, as the law does not intend to deprive an entrepreneur of the right to regulate his activity at his discretion and choice.
c. Combinations to regulate trade: when the manufacturer or distributor from a combination to regulate their business relationships Zaheer Khan vs. Percept D`mark India (P) Ltd, AIR 2004 Bom 362, a contract that limits the future freedom of the party, its business in a way that it likes, and with people of its choice, bound to unduly restrict trade. Under Indian law, any agreement related to the limitation of trade and the profession is not binding on the parties and does not bind them. Using the concept of void ab initio, it demonstrated, in the context of such agreements, that it had not taken this non-competition clause into account in the agreements. Indian courts have also consistently refused to impose non-competition prohibitions after the termination of employment contracts, because of the inadmissibility of “trade restrictions” under Section 27 of the Indian Contract Act 1872, and have found them unhinged and contrary to public policy because they may deprive a person of his or her fundamental right to live.