The chimera of restraint of trade in India

Kumar, Manasi (2021) The chimera of restraint of trade in India. Journal of Contract Law, 37. pp. 64-85.

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The Indian Contract Act 1872 (the ICA) is both an encapsulation of English common law and, in some significant respects, a study in divergence. One such difference is apparent in the realm of restraint of trade, where s 27 of the ICA declared all restraints of trade void. The Indian Supreme Court has limited the proscription of s 27 largely to negative covenants applicable after the termination of the agreement and, in doing so, implicitly adopted the elective theory of termination for employment agreements. However, this is in direct conflict with a parallel line of cases which approve of the automatic theory. This paper argues that, unlike s 27, the theory of termination in the ICA is still rooted in English common law principles and therefore, the conflict should be resolved in favour of the elective theory. Failure to do so threatens the ingenuity of the restraint of trade jurisprudence in India, with its hard-won, albeit meagre, flexibility.

Item Type: Article
Keywords: Indian contract act | Restraint of trade | Niranjan Shankar Golikari | Elective and automatic termination of contract
Subjects: Social Sciences and humanities > Social Sciences > Law and Legal Studies
JGU School/Centre: Jindal Global Law School
Depositing User: Mr. Syed Anas
Date Deposited: 06 Feb 2022 09:38
Last Modified: 06 Feb 2022 09:38
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