OCR A2 Contract Law Special Studies Paper - Restraint of Trade - Esso 16 Marker

This is for the 2013 paper only

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  • Created by: Majid
  • Created on: 02-01-13 12:37

Restraint of Trade - Esso 16 Marker

The case involves the law on exclusive dealing arrangements within the ROT doctrine. The case itself involved 2 garages exclusively buying petrol from Esso. It was held that the 4 1/2 year agreement was held to be reasonable and that the 21 year agreement was unreasonable. The significant point of this case is that it is the leading case within the solua industry which falls into the ROT doctrine, despite the original common law tendency regarding exclusive dealing arrangements as being void. The case is significant in developing the law as it represents a change in judicial attitude in dealing with transactions of this type. This is evident in Lord Wilberforce's statement where he states the courtmust take a "broad" approach and be "fluid" (S1, L25-27). The House of Lords applied the 2 conditions in "Nordenfelt v Maxim Nordenfelt", by using Lord Macnaughten's 2 conditions (S2, L30-33-). In doing so they found they could blue pencil. This case represents the HofL's ability to blue pencil and striking down the 21 year agreement as it wasn't in the interests of the parties and due to its precise language the Lords were able to sever easily. The usual position where bargaining strengths need to be equal wasn't taken as precise language was used in an unequal bargaining contract. The 4 1/2 year agreement was held to be valid as Lord Reid said you'd be able to maintain a stable system of distribution, therefore benefitting the economy and therefore the public. If this agreement was held to be valid, Esso would be put in a vulnerable position as it's estimated that 90% of filling stations were in exclusive dealing contracts. The same points were raised in Alec Lobb v Total Oil, however in this case the 21 year agreement was held to be valid due to the material difference in fact from Esso.

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