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The reasons alleged were: the disregard of the social interest in the freedom of individuals to enter whatever business they pleased; the mischief to the party by the loss of his livelihood and the subsistence of his family; the mischief to the public by depriving it of a useful member; and the tendency toward monopoly. The last would seem to be negligible. Today, such is the freedom and ease of transportation and of entering other occupations and businesses that the danger of the loss of livelihood and subsistence for a family is not such as to cause great concern. The same changes make it less likely, than formerly, that the public will feel the loss of the service of any of its members. But the social interest in all being free to enter whatever business they please is still so far operative that the mere contract to refrain from carrying on a business or occupation will be void.

This last consideration would, it is believed, be sufficient to invalidate the contract even though the promisor had not at the

2-Herreshoff v. Boutineau, 17 profit. The value of what he proR. I. 3, 6 (1890) (quotation given duces belongs to himself. The post § 7 note 13).

actual product belongs immedi. But see Kellogg V. Larkin, 3 ately to him who employs him, Pinn. (Wis.) 123 (1851) [151] but mediately to the state, (“The loss to society of a valuable and goes to swell the aggremember is as great a public injury gate of public wealth. Therefore, now as it ever was, and as great the law says to each and every here as anywhere. I hope, indeed, tradesman: You shall not, for a that the market value of a human present sum in hand, alien your being is higher now than it was in right to pursue that calling by England at the beginning of the which you can produce the most eighteenth century, when the case and add the most to the public of Mitchel V. Reynolds was de wealth, and compel yourself to a cided. The capacity of an individ life of supineness and inaction, or ual to produce (using that word in to labor in some department less its largest sense) constitutes his profitable to the state. And if any value to the public. That branch man, mindful of his

own gain of industry in which a man has alone, but not of the public good, been educated, and to which he is will bargain with you to that effect accustomed, and for the abandon you are held discharged from such ment of which he demands compen. bargain because of the advantage sation, is supposed to be the one in that will arise to the public from which he can render the greatest 80 holding,'')

time of his promise entered any business or occupation at all, and was not contemplating doing so.

The above conclusions presuppose the fact that the business is one which the public is interested in having carried on. If the business or occupation is one which, while lawful, is regarded as contrary to the public interest, such as the liquor business, it has been held that the mere contract to refrain from entering or carrying on such a business is valid.

SECTION 2

RESTRICTIVE CONTRACTS ACCOMPANYING THE PROMISOR'S ENTRY

INTO AN APPRENTICESHIP ARRANGEMENT, OR MADE UPON HIS
ENTRY INTO THE SERVICE OF THE PROMISEE FOR THE PURPOSE

OF LEARNING A TRADE OR BUSINESS

82. We have the following possible considerations against the validity of such covenants: The social interest in the freedom of individuals to enter what business they please is violated. The contract tends to deprive the promisor of his livelihood, the public of a useful member, and to eliminate competition between the promisor and the promisee. On the other side we have the desirability of permitting the teaching of apprentices or employees by masters. This involves providing the means whereby they may obtain their instruction on the best terms possible. The apprentice must purchase the instruction. Practically, the easiest way for him to do it is to give his services in part payment and a covenant not to compete in lieu of the balance. If the covenant not to compete is not allowed, the apprentice or employee must pay cash on the basis that the master is training a competitor. The result would be poor instruction and a price which an apprentice or employee would find difficulty in meeting. If the restriction is not broader than the business of the master, the apprentice would have a large territory in which to carry on the trade or business which he has learned, and other

3-Harrison v. Lockhart, 25 Ind. 112 (1865); McAlister v. Howell, 42 Ind. 15 (1865).

apprentices learning the same trade in other districts could come into the district of the master and there compete with him.

Upon a balancing of the interests, it is clear that where the restriction given by the apprentice or employee is not broader than the master's business, it is valid.4

83. Nor is it any objection to the restriction that it is to continue for the life of the promisor, and hence may continue after the master has died or gone out of business. The contract is still an asset of the master's estate after he is dead or when he sells his business or takes in a partner. Where he has abandoned his business, equity would no longer give an injunction, and the damages at law would be nominal.

§ 4. Formerly it was said that the consideration must be good and adequate, so as to make it a proper and useful contract. The later view is that a legal consideration which is also of some value must be given. But apparently the court will not undertake to weigh the value of the consideration against what is given in order to determine its adequacy.7

85. Suppose, however, that a country-wide business should exact such restrictive covenants of all employees entering the business or of all persons entering the business in any executive capacity, so that they would have no choice but to stay or change their occupation completely. Would not the balance of considerations be against supporting the validity of such arrangements? Here the loss of a livelihood might be a reality. The public might in fact be deprived of a useful member. The ten

re

4-Rousillon v. Rousillon, 14 Ch. 210; Cro. Eliz. 872; Noy, 98; Owen, D. 351 (1880); Badische v. Schott, 143; 2 Keb. 377; March, 191; L. R. (1892] 3 Ch. 447; Morse Show. 2 (not well reported); 2 Twist Drill & Machine Co. v. Morse, Saund. 155. 103 Mass. 73 (1869); Herreshoff v. "Or secondly, particular Boutineau, 17 R. I. 3 (1890). straints are with consideration.

5-Hitchcock v. Coker, 6 A. & “Where a contract for restraint E. 438 (1837) [12].

of trade appears to be made upon 6-Mitchel v. Reynolds, 1 P. Wms. a good and adequate consideration, 181 (1711) [4] (“Particular re so as to make it a proper and usestrains are either, first, without ful contract, it is good.'') consideration, all which are void by 7-Hitchcock v. Coker, 6 A. & E. what sort of contract soever created. 438 (1837) [26] and see cases cited 2 H. 5; 5 Moor 115, 242; 2 Leon post 8 7 note 12.

dency toward monopoly might become decisive. The hiring in such a business is not really for the purpose of training men to go out and conduct a similar business, but rather with the object of keeping them permanently. A restriction, then, upon their going into any other similar business could hardly be regarded as a part of the price for teaching them. Rather must it be looked upon as a method of hampering the employer's competitors. Hence, such wholesale restrictions would point to a monopoly purpose, both in regard to the business and with respect to securing the use of the labor of certain individuals.

SECTION 3

RESTRICTIVE CONTRACTS ACCOMPANYING THE SALE OF A BUSINESS,

WHICH SALE, HOWEVER, IS NOT MADE TO A COMPETITOR

86. (1) If the restriction is not broader than the business sold and is operative over a territory less than that of any state where the restriction applies, it is valid. The restriction is an essential part of any complete sale of the business. The social interest in the freedom of individuals to sell at the best price obtainable 9 balances any social interest in the freedom of individuals to enter what business they please.

V.

8-Bowser Bliss, 7 Black. 160 N. Y. 473 (1887) [60] (“It is (Ind.) 344 (1845); National Enam clear that public policy and the ineling & Stamping Co. v. Haberman, terests of society favor the utmost 120 Fed. 415 (1903); Holbrook v. freedom of contract, within the Waters, 9 How. Pr. (N. Y.) 335 law, and require that business trans(1854); Weller v. Hersee, 10 Hun. actions should not be trammeled by (N. Y.) 431 (1877); Hursen v. unnecessary restrictions''); LesGavin, 162 Ill. 377 (1896); Duffy lie v. Lorillard, 110 N. Y. 519 V. Shockey, 11 Ind. 70 (1858); (1888) [69] (The object of Whitney V. Slayton, 40 Me. 224 government, as interpreted by the (1855); Doty v. Martin, 32 Mich. judges, was not to interfere with 462 (1875); Dunlop v. Gregory, 10 the free right of man to dispose of N. Y. 241 (1851); Smith's Appeal, his property or of his labor.'); 113 Pa. St. 579, 590 (1886); Har Wood v. Whitehead Bros. Co., 165 kinson's Appeal, 78 Pa. St. 196 N. Y. 545 (1901) [76] (“In the (1875); Oregon Steam Navigation present practically unlimited field Co. v. Winsor, 87 U. S. 64 (20 of human enterprise there is no Wall.) (1873).

good reason for restricting the free9- Diamond Match Co. v. Roeber, dom to contract, or for fearing in

87. Formerly it was urged against the restriction that the seller might become a charge upon the community because he could not carry on his trade or business. 10 This was at once met

con

jury to the public from contracts which prevent a person from carrying on a particular business.'); National Benefit Co. v. Union Hogpital Co., 45 Minn. 272 (1891) [96] ("A contract may be illegal on grounds of public policy because in restraint of trade, but it is of paramount public policy not lightly to interfere with freedom of tract.''); United States Chemical Co. v. Provident Chemical Co., 64 Fed. 946 (1894) [102] (“In discussing this phase of the subject, we must not lose sight of some other principles, the disregard of which would be more harmful to public interest than monopolies. The right to contract is a cardinal element of constitutional liberty, and, as such, should be jealously guarded.''); Anchor Electric Co. v. Hawkes, 171 Mass. 101, 105 (1898) (“The general principle that arrangements in restraint of trade are not favored is, however, firmly established in law, and now, as well as formerly, is given effect whenever its application will not interfere with the right of everybody to make reasonable contracts. Whenever one sells a business with its good will, it is for his benefit, as well as for the benefit of the purchaser, that he should be able to increase the value of that which he sells by a contract not to set up a

new business in competition with the old.''); Smith's Appeal, 113 Pa. St. 579, 590 (1886) (“The principle is this: Public policy requires that every man shall not be at liberty to de

prive himself of the state of his labor, skill or talent, by any contract that he enters into. On the other hand, public policy requires that when a man has, by skill or by any other means, obtained something which he wants to sell, he should be at liberty to sell it in the most advantageous way in the market; and in order to enable him to so sell it, it is pecessary that he should be able to preclude himself from entering into competition with the purchaser."); Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507 (1899) [165] (“A tradesman, for example, who has engaged in a manufacturing business, and has purchased land, installed a plant, and acquired a trade connection and good will thereby, may sell his property and business, with its good will. It is of public interest that he shall be able to make such a sale at a fair price, and that his purchaser shall be able to obtain by his purchase that which he desired to buy. Obviously, the only practical mode of accomplishing that purpose is by the vendor's contracting for some restraint upon his acts, preventing him from engaging in the same business in competition with that which he has sold.''); Kellogg v. Larkin, 3 Pinn. (Wis.) 123 (1851) [142].

10–Mitchel V. Reynolds, 1 P. Wms. 181 (1711) [7] (. .

the true reasons of the distinction upon which the judgments in these cases of voluntary restraints are founded are, first, the mischief which may

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