Restraint of Trade
A contractual term that restricts a person's freedom to carry on their trade or profession. In sports law, transfer systems and non-compete clauses must not be an unreasonable restraint of trade.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
The doctrine of restraint of trade renders unenforceable, as contrary to public policy, contractual restrictions on a person's freedom to trade or practise their profession unless the party relying on the restriction can show it is reasonable. The doctrine's reach into sports and image-rights contracts was examined by the Court of Appeal in Proactive Sports Management Ltd v Rooney [2011] EWCA Civ 1444, concerning an exclusive agency agreement governing the footballer Wayne Rooney's image rights. The trial judge had held that 'the IRRA was unenforceable on the grounds of restraint of trade', and the Court of Appeal upheld that conclusion.
A key issue in Rooney was whether the doctrine applies to restrictions on an ancillary commercial activity — image rights exploitation — rather than a person's primary trade as a professional footballer. The Court of Appeal held that it does: a person's 'ancillary activity of exploiting his image rights is just as capable of protection under the doctrine of restraint of trade as any other occupation', because public policy is concerned with how a person may properly realise their earning potential generally, not only through their main occupation. The court also confirmed 'the doctrine of restraint of trade applied to the IRRA', given the young player's inexperience, the absence of independent legal advice, and the unusually long, one-sided exclusive tie the agreement imposed.
Where the doctrine is engaged, the question becomes whether the restriction is reasonable — reasonably necessary to protect the legitimate interests of the party relying on it, and no wider than required. This same reasonableness test underpins restraint of trade challenges to football transfer rules, players' agency agreements, and non-compete or exclusivity clauses generally: a restriction that goes further than necessary to protect a legitimate business interest, particularly one imposed on a party in a weak bargaining position without independent advice, risks being struck down as an unreasonable restraint of trade.
Example
An eight-year exclusive agency agreement tying a young, inexperienced athlete to a single agent, with no realistic right for the athlete to terminate early and no independent legal advice taken before signing, is vulnerable to challenge as an unreasonable restraint of trade, even though it relates only to the athlete's ancillary image-rights income rather than their main sporting career.
Related terms
Official sources
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