The Implications of “Restraint of Trade”

Restraint of trade is very similar to the modern “non-compete” agreement that some businesses will have employees sign. The intention of the document in those days was to protect traders from divulging trade secrets. Employees, or business partners, would have to sign such a document.
The contract was always meant as a protective measure, but is only used in reasonable circumstances to defend a business’ intellectual property.
At face value, restraint of trade doesn’t seem like it would be a popular policy. It is restrictive in the classical sense of capitalism, which makes such restrictions a difficult sell to business people. However, there is a paradoxical vested interest at play. Most businesses have some kind of secret that helps them operate efficiently, even if the “secret” is something ultimately mundane. Secrets can be anything, from a particular trade route to a method of doing business.
Restraint of trade functions the same way that deterrence worked during the Cold War. The idea was that neither party wished to pursue litigation, but the option is always there if the breach of contract is deemed “reasonable.” This is where things can get tricky for lawyers, and for lay people too.
The burden of proof was, and in some ways still is, on the business invoking the law. In some cases, both parties would need to prove that restrictions imposed on them were unreasonable, or that a breach of contract was inevitable under given terms. As business, and business law, evolved, the definition of “reasonable” became difficult to prove.
Restraint of trade is still applicable in law, but legislators are more likely to pursue competition legislation instead.

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