Agreement in Restraint of Trade and Recent Trends

Abstract

According to Section 27 of Indian Contract Act every agreement which restrains an individual from exercising a lawful profession, trade or business of any kind, is to that extent void, yet this section has an exception that if an agreement not to carry a business is not considered as restraint of trade if the goodwill of business is sold. Section 27 of the Indian Contract Act was being imported from the Draft Code of New York. The aim of enactment of Section 27 was to clear the way for trade from restraints which was a major factor playing development of the society. It was enacted at a time when trade was not that very developed in the state with an object to protect trade from restraints but when trade developed even the law commission opted to amend to visualize reasonable amount of restraint on trade