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What Is Agreement In Restraint Of Trade And Explain Its Exceptions

A non-compete obligation or a non-compete obligation is a term used in contracts in which the employee undertakes not to engage in a similar profession, profession or business in competition with the employer. In addition to regular employment contracts, these agreements are sometimes also included in agreements on the sale of goodwill or professional practice, termination of the employment relationship and other exclusive transactions and service contracts. The Indian Contract Act, 1872, which provides a framework of rules and regulations for the conclusion and enforcement of a treaty in India, deals with the legality of these non-compete obligations. It provides that an agreement which prevents anyone from carrying on a lawful profession, trade or enterprise is void in that regard. Under section 27 of the Indian Contracts Act, the trade restriction agreements of 1872 are void. A trade-restricting agreement is defined as one in which a party agrees with another party to restrict, in the present or in the future, its freedom to engage in a particular trade or profession with other persons who are not parties to the contract, without the express permission of the latter party in a manner chosen by the latter party. Restricting recruitment in employees` employment contracts in the form of confidentiality obligations or restrictions on employment with competitors has become part of the corporate culture. However, the researcher will address in his work the exceptions for the same thing that are also provided for in the last part of the same section, that is, 27 of the Indian Contracts Act, 1872. ARTICLE 27; Any agreement that prevents anyone from engaging in any legal profession, trade or business of any kind is void to that extent. EXCEPTION: A person who sells the goodwill of a business with a buyer in order to refrain from carrying on a similar business within certain local boundaries, as long as the buyer or a person who diverts ownership of the goodwill from him carries out a similar activity there, provided that such limits seem appropriate to the court, taking into account the nature of the undertaking […].