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

This is for the 2013 paper only

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  • Created by: Majid
  • Created on: 02-01-13 15:20

Restraint of Trade - Schroeder 16 Marker

The case involves the law on exclusive service arrangements which fall within the ROT doctrine. The case itself involved a young artist tied into a 5-10 year agreement assigning all responsibility to Schroeder Music. The clause was held to be unreasonable at first instance, then the CofA and HofL, showing judicial unity policing their commitment to these clauses.

The case is significant as the judges recognised the case fell in the doctrine of ROT and therefore applied the 2 conditions by Lord Macnaughten in Nordenfelt and found that the agreement was contrary to public policy and the public were denied "the fruits of his particular abilities". The agreement wasn't in the interests of the parties as the agreement was one-sided. The case fell within the doctrine of ROT despite arguments being made by the appellants that this transaction was in standard form and normal is that commercial practice. The Lords dismissed the argument that it "stood the test of time" and no injustice was caused.

The lords referred to Esso in identifying whether the case fell within normal practice but found it was "negotiated" on unequal terms. The lords therefore took a paternalistic approach iin refraining a party in the other, moving awaya from the laissez-faire approach and becoming more active in policing such clauses. The case can be contrasted with Panayiotou v Sony Music where the 10 year agreement was held to be valid as parties negotiated on some what equal terms and George Michael received a large sum of money as consideration. This shows the pragmatic nature of judges in reaching decisions in transactions of this type.

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