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Early Common Law

Pre-Sherman common law definition of an enforceable restraint of trade:

  1. The restraint is ancillary (i.e., supporting) to some lawful agreement;
  2. The restraint is reasonable with respect to time, scope, locality; AND
  3. The restraint is reasonable with respect to the parties and public interest.

Caselaw:​

Dyer's Case (1415)​

  • Holding: A covenant not to engage in a lawful trade or calling is void (unenforceable) per se
    • Burden on community: a person who can't engage in a trade will rely on the church parish to support them
  • Facts: Dyer agreed not to practice trade in hometown.
  • Note: ruling refined by Mitchel v. Reynolds

Case of the Ancient School (1410)​

  • Holding: contracts in restraint of trade are enforceable if (1) the restraint is ancillary to some lawful agreement, (2) the restraint is reasonable with respect to time, scope, locality, and (3) the restraint is reasonable with respect to the parties and public interest.
  • Note: emphasis on unreasonable restraints of trade
    • Examples with ancillary agreement to restraint trade include sale of a business (agreement to not immediately open competitor nearby), employment/apprenticeship contracts (agreement not to leave immediately), partnership agreements