OCR A2 Contract Law - Special Studies Paper - Jan/June 2013 - Restraint of Trade 34 Marker (2)

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Preview of OCR A2 Contract Law - Special Studies Paper - Jan/June 2013 - Restraint of Trade 34 Marker (2)

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Restraint of Trade - 34 Marker (5)
Petrol Solus Industry: Restraint of Trade - 34 Marker (6)
Other areas (Music/Sports Management Industry):
Judges have now identified other areas where an ROT clause operates. They are
now evident in the Petrol Industry. In petrol trade, suppliers are large Other businesses such as the Music industry and sports management industry can also
international companies and the distributors are of small-scale service stations. come within the ROT doctrine if they are one-sided. These 2 cases were concerned with
The leading case in this area is "Esso v Harpers Garage" (Facts of case Source 5, "exclusive-service arrangements". The leading case in this area is "Schroeder Music
L15-20). In the later case of "Alec Lobb v Total Oil", a lease-lease back Publishing v Macaulay". (Facts of the case and what was held and why in source 6, L1-12).
arrangement between Mr and Mrs L and Total Oil was made. They were to sell Whilst the same rules apply, this can be contrasted with the later case of "Panayiotou v Sony
Total oil petrol for 21 years. Music International". In this case an arrangement in 1984 was changed to reflect George
Michael's superstar status. The restraint enforced meant that Sony had ownership of all
George's music for 10 years.
Total Oil AO2: In this case it was held to be reasonable as it was designed to be a
AO2: It was held to be valid, as the courts accepted the 1984 agreement in 1998 as a
rescue operation designed to benefit the customers. The lease-lease back clauses "compromise" and George Michael benefitted from a large sum of money and he had an
had break clauses at 7 and 14 years and as source 5, lines 31-33 states "the 21 experienced negotiator on his side.
year restraint was upheld" so that Mr and Mrs L weren't locked in a contract for 21
The case of "Watson v Prager", is based around a boxer being told he can't have another
years. manager for 3 years, and the contract would get extended for a further 3 years if he became
a champion. This was held to be unreasonable as there was confusion that the BBBC had to
Esso + General AO2: The courts have recognised this industry does fall into the address. As the boxing manager was also the promoter there was a conflict of interest due
doctrine of ROT and the courts intervention is maybe due to the fact the petrol to the BBBC being arbitrators as well as the people in charge.
industry is in a better bargaining position than the garages. Therefore, the AO2: These cases show how the courts are prepared to develop the law to reflect the
restraint on the 4 1/2 year agreement was valid as Lord Reid stated it was changes in society, despite the industries arguing standard form contracts as their defence.
necessary to maintain a stable system of distribution as it was necessary to This can be seen in source 5 at lines 26-28. This was later repeated by Lord Wilberforce in
protect "Esso's" legitimate interests as they've spent billions of pounds digging source 1 at lines 25-27 where he stated ROT clauses should be applied only in "factual
the oil and distributing it. However 21 year agreement was too excessive and was situations" with a "broad" and "flexible" approach. This was further reinstated by Lord Reid
declared void. In fact 90% of garages are already tied up into a contract with only and Lord Diplock in source 6 at lines 31-33 and 35-40.
one supplier as they find it hard to break off any contract when they're tied down
for long periods of time.

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Restraint of Trade - 34 Marker (7) Restraint of Trade - 34 Marker (8)
Blue Pencilling Approach: Article 101/102:
If a restraint was too wide, it is usually void. However, the courts don't replace it Any agreement aimed at restricting someone within the EU/UK are subject to the
to what they think "should" be reasonable but may sever or Blue Pencil the controls of the European Union under Article 101 and 102 of the Treaty on the
defective parts of the clause.…read more


john conor

im here to help

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