Expositions on the Restraint of Trade Threshold

LexisNexis Butterworths
Publication Type:
Journal Article
Journal of Contract Law, 2012, 29 (2-3), pp. 208 - 230
Issue Date:
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This article examines the legal basis of the restraint of trade `threshold tests formulated by the House of Lords in Esso Petroleum v Harpers Garage and affirmed by the High Court of Australia in Peters (WA) Ltd v Petersville Ltd. The purpose of these tests is to relieve a covenantee from the `burden of going into evidence to justify a restraint of trade. Commentary has often pointed to the inconsistencies in application of the various threshold tests. This article considers the origins of these tests to explain why these inconsistencies occur and in so doing suggests that the tests lack a proper grounding in law and logic and, as such, should be abandoned.Since at least the 15th century the restraint of trade doctrine has permitted covenantors aggrieved at wrongly being excluded from trade to challenge the validity of a trade restraint despite their contractual assent. It is of no small consequence that covenantors should be denied by application of the threshold tests access to the restraint of trade doctrine and deprived of the opportunity to argue as to `reasonableness under the Nordenfelt approach.
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