General restraint of trade refers to an agreement that prevents a person or business from engaging in a specific trade or profession in a broad area. This type of restraint is considered a violation of public policy and is deemed void. It essentially creates a monopoly by limiting competition and is therefore unlawful.
This term is commonly used in the context of antitrust law and contract law. It applies when evaluating agreements that may restrict trade or business activities. Legal professionals may encounter this term when dealing with cases involving unfair competition, monopolistic practices, or restrictive covenants in employment contracts. Users can manage certain aspects of these legal issues using templates from US Legal Forms, which offer resources drafted by qualified attorneys.
Here are a couple of examples of abatement:
Example 1: A business owner signs a contract that prohibits them from operating their retail store in any state. This agreement would be considered a general restraint of trade and would likely be void.
Example 2: An employee agrees not to work in their industry for five years after leaving a company, but the agreement restricts them from working anywhere in the country. This could also be seen as a general restraint of trade. (hypothetical example)
| State | General Restraint of Trade |
|---|---|
| California | Generally, restrictive covenants are void unless they are limited to specific geographic areas. |
| New York | Allows certain restraints if they are reasonable in duration and geographic scope. |
| Texas | Restrictive covenants are enforceable if they protect legitimate business interests. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Key Difference |
|---|---|---|
| Restraint of Trade | A broader category that includes any agreement limiting trade. | General restraint is a specific type that is more restrictive. |
| Non-Compete Agreement | A contract preventing an employee from competing with their employer after leaving. | Non-compete agreements can be valid if reasonable, while general restraints are typically void. |
If you believe you are affected by a general restraint of trade, consider the following steps:
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It is an agreement that prevents a person or business from engaging in a specific trade or profession in a broad area.