OCR A2 Contract Law Special Studies Paper - Restraint of Trade - 34 Marker (5)

Petrol Solus 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 international companies and the distributors are of small-scale service stations. The leading case in this area is "Esso v Harpers Garage" (Facts of case Source 5, L15-20). In the later case of "Alec Lobb v Total Oil", a lease-lease back arrangement between Mr and Mrs L and Total Oil was made. They were to sell Total oil petrol for 21 years.

AO2: In this case it was held to be reasonable as it was designed to be a rescue operation designed to benefit the customers. The lease-lease back clasues had break clauses at 7 and 14 years and as source 5, lines 31-33 states "the 21 year restraint was upheld" so that Mr and Mrs L weren't locked in a contract for 21 years. The courts have recognised this industry does fall into the doctrine of ROT and the courts intervention is maybe due to the fact the petrol industry is in a better bargaining position than the garages. Therefore, the restraint on the 4 1/2 year agreement was valid as Lord Reid stated it was necessary to maintain a stable system of distribution as it was necessary to protect "Esso's" legitimate interests as they've spent billions of pounds digging the oil and distributing it. However 21 year agreement was too excessive and was declared void. In fact 90% of garages are already tied up into a contract with only one supplier as they find it hard to break off any contract when they're tied down for long periods of time.