Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd

Last updated

Esso Ltd v Harper’s Garage (Stourport) Ltd
Esso gasbar, 8th St, Saskatoon.JPG
Stock image of a modern Esso garage in 2008.
CourtHouse of Lords
Citations[1967] UKHL 1, [1968] AC 269, [1967] 1 All ER 699, [1967] 2 WLR 871, 201 Estates Gazette 1043
Court membership
Judges sitting Lord Reid, Lord Morris of Borth-y-Gest, Lord Hodson, Lord Pearce, Lord Wilberforce
Keywords
Contract, illegality, restraint of trade

Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1967] UKHL 1 is an English contract law case, concerning the restraint of trade through a tying arrangement.

Contents

Facts

Harper's Garage agreed to accept all petrol for its two stations from Esso for a long period of time, a solus agreement. It agreed to keep the garage open at all reasonable hours and not to sell it without ensuring that the buyer entered a similar agreement. One agreement was for 5 years, the other for 21 years.

Judgment

The House of Lords held that the 5-year agreement was valid and the 21-year agreement was invalid.

Lord Reid said he ‘would not attempt to define the dividing line between contracts which are and contracts which are not in restraint of trade’. It was preferable ‘to ascertain what were the legitimate interests of the [suppliers] which they were entitled to protect and then to see whether these restraints were more than adequate for that purpose.’

Significance

In Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2020] [1] the Supreme Court invoked the Practice Statement to depart from Esso with Lord Wilson stating:

the objections to the test are that it has no principled place within the doctrine; that it has been consistently criticised for over 50 years and, although in some quarters loyally applied, the reasoning behind it has, to the best of my knowledge, scarcely been defended; and that the common law has been limping between the continuing authority of the test in our jurisdiction and its rejection in Australia and in parts of Canada. [2]

See also

Notes

  1. [2020] UKSC 36, case page
  2. Paragraph 50, full judgment

Related Research Articles

<i>Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd</i>

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd[1915] UKHL 1, [1915] AC 847 is an English contract law case, with relevance for UK competition law, decided in the House of Lords. It established that an agreement for resale price maintenance was unenforceable as a matter of privity of contract.

<span class="mw-page-title-main">Misrepresentation</span> Untrue statement in contract negotiations

In common law jurisdictions, a misrepresentation is a false or misleading statement of fact made during negotiations by one party to another, the statement then inducing that other party to enter into a contract. The misled party may normally rescind the contract, and sometimes may be awarded damages as well.

<span class="mw-page-title-main">Illegal agreement</span> Agreement to engage in illegal activity

An illegal agreement under the common law of contract, is one that the court will not enforce because the purpose of the agreement is to achieve an illegal end. The illegal end must result from performance of the contract itself. The classic example of such an agreement is a contract for murder.

<span class="mw-page-title-main">Restraint of trade</span> Common law doctrine

Restraints of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. It is a precursor of modern competition law. In an old leading case of Mitchel v Reynolds (1711) Lord Smith LC said,

it is the privilege of a trader in a free country, in all matters not contrary to law, to regulate his own mode of carrying it on according to his own discretion and choice. If the law has regulated or restrained his mode of doing this, the law must be obeyed. But no power short of the general law ought to restrain his free discretion.

<i>Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd</i> English court case of the 19th century

Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 is a 19th-century English case decided by the House of Lords. The dispute was about restraint of trade, and the judgment declares when such a restraint may become valid.

<span class="mw-page-title-main">Contractual term</span> Any provision forming part of a contract

A contractual term is "any provision forming part of a contract". Each term gives rise to a contractual obligation, the breach of which may give rise to litigation. Not all terms are stated expressly and some terms carry less legal gravity as they are peripheral to the objectives of the contract.

The history of competition law refers to attempts by governments to regulate competitive markets for goods and services, leading up to the modern competition or antitrust laws around the world today. The earliest records traces back to the efforts of Roman legislators to control price fluctuations and unfair trade practices. Throughout the Middle Ages in Europe, kings and queens repeatedly cracked down on monopolies, including those created through state legislation. The English common law doctrine of restraint of trade became the precursor to modern competition law. This grew out of the codifications of United States antitrust statutes, which in turn had considerable influence on the development of European Community competition laws after the Second World War. Increasingly, the focus has moved to international competition enforcement in a globalised economy.

<span class="mw-page-title-main">English contract law</span> Law of contracts in England and Wales

English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the Industrial Revolution, it shares a heritage with countries across the Commonwealth, from membership in the European Union, continuing membership in Unidroit, and to a lesser extent the United States. Any agreement that is enforceable in court is a contract. A contract is a voluntary obligation, contrasting to the duty to not violate others rights in tort or unjust enrichment. English law places a high value on ensuring people have truly consented to the deals that bind them in court, so long as they comply with statutory and human rights.

<i>Torquay Hotel Co Ltd v Cousins</i>

Torquay Hotel Co Ltd v Cousins [1968] EWCA Civ 2 (BAILII) is a UK labour law case concerning the liability of a union when its members take industrial action.

Contractual terms in English law is a topic which deals with four main issues.

<i>Southern Foundries (1926) Ltd v Shirlaw</i>

Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701 is an important English contract law and company law case. In the field of contracts it is well known for MacKinnon LJ's decision in the Court of Appeal, where he put forth the "officious bystander" formulation for determining what terms should be implied into agreements by the courts. In the field of company law, it is known primarily to stand for the principle that damages may be sought for breach of contract by a director even though a contract may de facto constrain the exercise of powers to sack people found in the company's constitution.

<i>Esso Petroleum Co Ltd v Mardon</i> English contract law case

Esso Petroleum Co Ltd v Mardon [1976] EWCA Civ 4 is an English contract law case, concerning misrepresentation. It holds that the divide between a statement of opinion and fact becomes more factual if one holds himself out as having expert knowledge.

<i>Mogul Steamship Co Ltd v McGregor, Gow & Co</i>

Mogul Steamship Co Ltd v McGregor, Gow & Co [1892] AC 25 is an English tort law case concerning the economic tort of conspiracy to injure. A product of its time, the courts adhered to a laissez faire doctrine allowing firms to form a cartel, which would now be seen as contrary to the Competition Act 1998.

<i>Alec Lobb (Garages) Ltd. v Total Oil (GB) Ltd.</i>

Alec Lobb (Garages) Ltd. v Total Oil (GB) Ltd.[1984] EWCA Civ 2 is an English contract law case relating to undue influence.

Illegality in English law is a potential ground in English contract law, tort, trusts or UK company law for a court to refuse to enforce an obligation. The illegality of a transaction, either because of public policy under the common law, or because of legislation, potentially means no action directly concerning the deal will be heard by the courts. The doctrine is reminiscent of the Latin phrase "Ex turpi causa non oritur actio", meaning "no cause of action arises from a wrong". The primary problem arising when courts refuse to enforce an agreement is the extent to which an innocent party may recover any property already conveyed through the transaction. Hence, illegality raises important questions for English unjust enrichment law.

<i>Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd</i> English contract law case

Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd[1914] UKHL 1 is an English contract law case, concerning the extent to which damages may be sought for failure to perform of a contract when a sum is fixed in a contract. It held that only if a sum is of an unconscionable amount will it be considered penal and unenforceable. The legal standing of this case has been superseded by the Supreme Court's 2015 ruling in the combined cases of Cavendish Square Holding BV v Talal El Makdessi and ParkingEye Ltd v Beavis.

Macaulay v Schroeder Music Publishing Co Ltd [1974] 1 WLR 1308 is an English contract law decision of the House of Lords relating to restraint of trade.

<i>Reddy v Siemens</i> South African legal case

In Reddy v Siemens Telecommunications (Pty) Ltd, the Supreme Court of Appeal of South Africa upheld the enforceability of an agreement in restraint of trade. The unanimous judgment was handed down on 30 November 2006 and was written by Acting Judge of Appeal Frans Malan. Per Magna Alloys v Ellis and Basson v Chilwan, Malan tested the reasonableness of the restraint in order to establish its enforceability.

<i>Cavendish Square Holding BV v Talal El Makdessi</i> English contract law case

Cavendish Square Holding BV v Talal El Makdessi[2015] UKSC 67, together with its companion case ParkingEye Ltd v Beavis, are English contract law cases concerning the validity of penalty clauses and the application of the Unfair Terms in Consumer Contracts Directive. The UK Supreme Court ruled on both cases together on 4 November 2015, updating the established legal rule on penalty clauses and replacing the test of whether or not a disputed clause is "a genuine pre-estimate of loss" with a test asking whether it imposed a proportionate detriment in relation to any "legitimate interest" of the innocent party.

Foley v Classique Coaches Ltd. [1934] 2 KB 1 is an English contract law case decided in 1934 relating to restraint of trade and forward-looking agreements to agree. The initial judgment delivered in the High Court held that there was no "undue" restraint of trade, and this was upheld in the Court of Appeal.

References