Restraint of Trade - Nordenfelt 16 Marker
The case involves the judges becoming involved in ROT clauses. The case itself involved the selling of an arms business and the courts intervention into the clause. It was held that the clause was held to be valid as it was justified to the test of reasonableness, however the latter part of the clause was held to be unreasonable.
The significance of this case is that it is the leading case in ROT as it rebutted all the old common law position as being prima-facie void as they were contrary to public policy.
The judges recognised in this case that the law was far too rigid and it must have interfered with every day transactions, therefore the law was "relaxed". And some clauses were held to be reasonable if justified.
Lord Macnaughten laid the test of reasonableness which is used to see if an ROT clause is valid. (State the 2 conditions - i.e. reasonable in the interests of parties and public - S2,L30-33). Shows a shift in judicial unity within the case itself as the decision made at first instance was agreed by CofA and HofL. The case is significant in contributing to the Law by setting precedent on the law on ROT as later decisions have all applied the 2 conditions in finding whether an ROT clause is reasonable or unreasonable e.g. in Mason, where it was unreasonable in paralysing earning capacities and in Fitch v Dewes, where the clause was held to be reasonable as it was in the interests of the parties as it was protecting the client base.