has been passed by the Commonwealth of Australia and four of the Australian States.1

Although more elaborate than the English Prevention of Corruption Act,2 these statutes were intended to accomplish the same results. The passage of these laws was largely due to the disclosures of the Royal Commission on the Butter Industry, which reported, among other things, that the practice of making secret payments prevailed to an alarming extent in the dairying industry, and that "the business of traders and agents who have withstood the solicitations for commissions has consequently suffered from such refusal to make secret payments." In urging the passage of the Commonwealth bill the attorney general expressed the belief that the majority of agents adhered rigidly to the honest course, but these, he stated, "had to submit to the result which followed their adherence to that course, because there were others less scrupulous, who did not hesitate to do what the courts, as well as common sense and moral sense, designate as unfair, unjust, and improper."

An act for the prohibition of secret commissions, passed by the General Assembly of New Zealand in December, 1910,5 is substantially similar to the Australian statutes referred to above. Briefly, it prohibits gifts to an agent without the consent of the principal, requires agents to disclose any pecuniary interest they may have in contracts made on behalf of their principal, penalizes the giving of false receipts, invoices, etc., to agents, the delivery of such false documents to the principal, and provides for the punishment of

1 Commonwealth Act No. 10 of 1905; Victoria, 5 Edw. VII, No. 1974. In Rex v. Scott (1907), Victorian Law Reps., 471, the defendant, a paint manufacturer, was convicted of having corruptly given money to an employee of the Melbourne Hospital in charge of certain painting for the purpose of influencing the latter to show favor to the defendant in connection with the purchase of material. The representative of another paint manufacturer was accused of a similar offense and acquitted. (Rex v. Stevenson (1907), Victorian Law Reps., 475); Western Australia, 5 Edw. VII, No. 13; Tasmania, 6 Edw. VII, No. 21; South Australia, 1 Geo. V, No. 1006.

2 See p. 535.

3 Report of Royal Commission on the Butter Industry, Australian (Commonwealth), Parliamentary Papers, 1905, vol. II, p. 1219, 1250.

4 Australian (Commonwealth) Parliamentary Debates, 1905, vol. XXV, p. 494, 495. At a conference of Federal and State ministers, held at Hobart in February, 1905, it was resolved "that each State government bring in a bill dealing with secret commissions, and that the premier of Victoria be asked to draft such a bill." At the premiers' conference at Brisbane in June, 1907, it was resolved "that those States which have not yet passed legislation on the lines of the Victorian secret commissions act be urged to do so without any undue delay." (See South Australian Debates, 1909, Legislative Council, p. 64; ib., 1910, p. 336; House of Assembly, 1910, p. 400.)

For additional information respecting the prevalence and effect of these practices, see Australian (Commonwealth) Parliamentary Debates, vol. XXV, p. 494 et seq.; Report of Royal Commission on the Butter Industry, Australian (Commonwealth) Parliamentary Papers, session 1905, vol. II, p. 1225; Western Australia, Parliamentary Debates, 1905, vol. XXVIII (n. s.), pp. 256, 608; New Zealand, Parliamentary Debates, vol. 153, p. 452; South Australia, Parliamentary Debates, Legislative Council, 1909, p. 64; ib., 1910, p. 336; House of Assembly, 1910, p. 400; Canada, Debates of the House of Commons, 1909, pp. 1484, 1490.

Act No. 40, of 1910.

those aiding and abetting offenses against the act. Except as expressly provided for by the act, proof of custom is no defense. As in England and the Australian States, no prosecution for an offense against the act may be commenced without the consent of the attorney general.

Similar legislation has been enacted in the Isle of Man1 and Sierra Leone.2

EXCLUSIVE CONTRACTS (TYING CLAUSES). In 1907 the English Parliament passed the Patents and Designs (amendment) Act and for the first time made unlawful certain restrictions attached to the sale, lease, or use of patented articles or processes, declaring them to be in restraint of trade and contrary to public policy. The act provides in part as follows: 3

It shall not be lawful in any contract made after the passing of this act in relation to the sale or lease of, or license to use or work, any article or process protected by a patent to insert a condition the effect of which will be

(a) To prohibit or restrict the purchaser, lessee, or licensee from using any article or class of articles, whether patented or not, or any patented process, supplied or owned by any person other than the seller, lessor, or licensor, or his nominees; or

(b) To require the purchaser, lessee, or licensee to acquire from the seller, lessor, or licensor, or his nominees, any article or class of articles not protected by the patent;

and any such condition shall be null and void, as being in restraint of trade and contrary to public policy: Provided, That this subsection shall not apply if

(i) The seller, lessor, or licensor proves that at the time the contract was entered into the purchaser, lessee, or licensee had the option of purchasing the article or obtaining a lease or license on reasonable terms without such conditions as aforesaid; and

(ii) The contract entitles the purchaser, lessee, or licensee to relieve himself of his liability to observe any such condition on giving the other party three months notice in writing and on payment in compensation for such relief in the case of a purchase of such sum, or in the case of a lease or license of such rent or royalty for the residue of the term of the contract, as may be fixed by an arbitrator appointed by the Board of Trade.

The insertion by the patentee in a contract, made after the passing of this act of any condition which by virtue of this section is null and void shall be available as a defense to an action for infringement of the patent to which the contract relates, brought while that contract is in force.

Nothing in this section shall

(a) Affect any condition in a contract whereby a person is prohibited from selling any goods other than those of a particular person; or

(b) Be construed as validating any contract which would, apart from this section, be invalid; or

1 Apr. 14, 1908.

2 Ordinance No. 11, of 1907.

3 Patents and Designs (amendment) Act, 1907, ch. 28, sec. 24 (1), (4), (5); and see ch. 29, sec. 38 (1), (4), (5).

(c) Affect any right of determining a contract or condition in a contract exercisable independently of this section; or

(d) Affect any condition in a contract for the lease of or license to use a patented article, whereby the lessor or licensor reserves to himself or his nominees the right to supply such new parts of the patented article as may be required to put or keep it in repair.

With minor changes, these provisions were adopted in Australia.1 The objectionable conditions, however, were not declared to be in restraint of trade. The Australian patents act provides also that any person may, after the expiration of two years from the granting of a patent, present a petition alleging that the reasonable requirements of the public with respect to the invention have not been satisfied and praying for the grant of a compulsory license or, in the alternative, for the revocation of the patent. The reasonable requirements of the public are not deemed to have been satisfied if, among other things, by reason of the default of the patentee "to grant licenses on reasonable terms; any existing trade or industry, or the establishment of any new trade or industry, in Australia is unfairly prejudiced; " or, "if any trade or industry in Australia is unfairly prejudiced by the conditions attached by the patentee to the purchase, hire, or use of the patented article, or to the using or working of the patented process." 2

* *

Other provisions relating to exclusive dealing are contained in the Australian Industries Preservation Act, which is separately considered below. (See p. 551.)

In 1911 New Zealand adopted legislation similar to the English patent act quoted above, and, unlike Australia, retained the declaration that such conditions are in restraint of trade and contrary to public policy.

In Canada an act to amend the inland revenue act provides that the license of any manufacturer of goods subject to a duty of excise may be revoked by the Minister of Inland Revenue if the licensee

(1) Makes a sale of such goods, or consigns them for sale upon commission, subject to the condition that the purchaser or consignee

1 Commonwealth Acts, 1909, The Patents Act, Pt. V, sec. 87b (1), (5), (6). 2 Ib., sec. 87 (1), (6). See p. 247.

In Victoria the minister of mines in December, 1913, introduced a bill which provided, among other things, that any person who conspires or agrees to refuse to sell goods for cash to any other person, either absolutely or except upon disadvantageous and oppressive terms or conditions, shall be guilty of a misdemeanor. It was further provided that "the terms and conditions upon which goods are sold or offered for sale or attempted to be sold shall be deemed to be disadvantageous and oppressive when either expressly or by implication they provide that the buyer of any goods referred to or specified in the schedule to this act shall not buy such goods from any other person or class of persons than the seller of such goods or from persons or classes of persons indicated by the said seller." The consideration of this bill was postponed. Victoria, Parliamentary

Debates, session 1913-14, pp. 3349, 3350, 3887.

4 New Zealand Stats., 1911, Act No. 17, sec. 40 (1), (4), (5). Act of Aug. 10, 1904. See p. 240.

shall not sell or deal in similar goods produced by or obtained from any other manufacturer or dealer; or

(2) Makes a sale of such goods, or consigns them for sale upon commission, to another person upon such terms as would in their application give more profit to the purchaser or consignee if he should not sell or deal in goods of a like kind produced by or obtained from any other manufacturer or dealer.

The decision of the minister of inland revenue is final as to the facts in the case. Distillers, rectifiers, compounders, brewers or malsters, manufacturers of tobacco or cigars, or bonded manufacturers are subject to license.

This act was passed as a result of an investigation by a royal commission appointed for the purpose of inquiring into an exclusive contract system alleged to be then employed by the American Tobacco Co. of Canada and the Empire Tobacco Co. (Ltd.). It was charged that the object and effect of the system was to prevent those who dealt in goods made by these companies from selling those of other manufacturers, thus creating a monopoly. The commission reported that such a contract system existed in the cigarette and tobacco trade in Canada; that such contracts were not illegal either under the common law or any then existing statutes, and that other manufacturers were at a disadvantage as a result.1

The Canadian Combines Investigation Act has been described in Chapter V.2 Although not specifically prohibiting contracts for exclusive dealing, it may be noted that a board, appointed under the authority of that act to investigate the United Shoe Machinery Co. of Canada, after considering the form of certain leases adopted by that company and the effect of tying clauses contained therein, arrived at the conclusion that:

The United Shoe Machinery Co. of Canada is a combine and by the operation of the clauses of the leases, quoted in the foregoing, which restrict the use of the leased machines in the way therein set forth, competition in the manufacture, production, purchase, sale, and supply of shoe machinery in Canada has been and is unduly restricted and prevented.

The Commercial Trusts Act of New Zealand, which has been described in Chapter V, forbids certain forms of rebating in consideration of exclusive dealing. Perhaps the most striking provision of this act, however, is that which also makes illegal, under certain con

1 See Proceedings of the House of Commons, Apr. 12, 1910, session 1909-10, vol. IV, column 6853.

2 See p. 241.

3 In re N. Drouin et al. and The United Shoe Machinery Co. of Canada, The Canada Gazette, Oct. 26, 1912, pp. 1319, 1323.

4 See p. 251.

ditions, the refusal to deal with another. These provisions are found in sections 3 and 4, the language of which is as follows:

3. Every person commits an offense who, either as principal or agent, in respect of dealings in any goods, gives, offers, or agrees to give to any other person any rebate, refund, discount, concession, allowance, reward, or other valuable consideration for the reason or upon the express or implied condition that the latter person

(a) Deals or has dealt or will deal, or intends or undertakes or has undertaken or will undertake to deal, exclusively or principally, or to such an extent as amounts to exclusive or principal dealing, with any person or class of persons, either in relation to any particular goods or generally; or

(b) Does not deal or has not dealt or will not deal, or intends or undertakes or has undertaken or will undertake not to deal, with any person or class of persons, either in relation to any particular goods or generally; or

(c) Restricts or has restricted or will restrict, or intends or undertakes or has undertaken or will undertake to restrict, his dealing with any person or class of persons, either in relation to any particular goods or generally; or

(d) Is or becomes or has been, or has undertaken or will undertake to become, a member of a commercial trust; or

(e) Acts or has acted or will act, or intends or undertakes or has undertaken or will undertake to act, in obedience to or in conformity with the determinations, directions, suggestions, or requests of any commercial trust with respect to the sale, purchase, or supply of any goods.

4. Every person commits an offense who, either as principal or agent, refuses either absolutely or except upon disadvantageous or relatively disadvantageous conditions, to sell or supply to any other person, or to purchase from any other person, any goods for the reason that the latter person

(a) Deals or has dealt or will deal, or intends to deal, or has not undertaken or will not undertake not to deal, with any person or class of persons, either in relation to any particular goods or generally; or

(b) Is not or has not been, or will not become or undertake to become or has not undertaken to become, a member of a commercial trust; or

(c) Does not act or has not acted or will not act, or does not intend to act, or has not undertaken or will not undertake to act, in obedience to or in conformity with the determinations, directions, suggestions, or requests of any commercial trust with respect to the sale, purchase, or supply of any goods.

It should be noted that this act applies only to certain classes of goods.1 The reason assigned by the Prime Minister for limiting the operation of this act to the articles mentioned was that it was desired to interfere as little as possible with trade generally, and if the act were made one of general application a modification of the drastic provisions would be necessary.2

In 1911 the governor general of the Union of South Africa was authorized by law to enter into ocean-mail contracts, but it was provided that he should not enter into any such contract with any person who "gives, offers, or promises to any person any rebate, refund,

1 Agricultural implements, coal, meat, fish, flour, oatmeal, and the other products or byproducts of the milling of wheat or oats, petroleum or other mineral oil (including kerosene, naphtha, and the other products or by-products of any such oil), sugar, and tobacco (including cigars and cigarettes).

2 New Zealand Parliamentary Debates, Oct. 20, 1910, vol. 152, p. 656.