This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Covenants concerning the use of realty may be looked upon as giving the adversary party some interest in such realty which may be protected by injunction. The doctrine of relief by injunction is, however, by no means limited to contracts of this class. A contract not to compete in a certain business or trade will, if not void as unreasonable, be enforced by injunction.1 So injunction has been given to prevent breach of a covenant by a physician,2 or a dentist,3 or a dressmaker,4 not to engage in the practice of his profession, business or trade. The contracts already discussed are entered into to protect the good will of a business or a practice which has been sold by the party who agrees to refrain from competition. Injunction may be given in other cases. Thus a contract by a department store not to sell any patterns of any make other than that of the adversary party to the contract,5 or a contract between a number of business men to close their places of business at a certain hour,6 or a covenant by a lessee not to sell any beer except that of a specified manufacture on the leased premises,7 may be enforced by injunction. A contract to take electric energy from one company alone for five years may be enforced by injunction to prevent the party to whom it was furnished from taking such energy from any other person.8 Injunction has, however, been refused under a similar contract for supplying gas on the theory that the remedy at law was adequate.9 Injunction has been allowed where the party under contract to furnish gas breaks or threatens to break his contract.10 Thus a contract between a natural gas company and a city whereby the gas company agrees not to charge more than a certain price for gas may be enforced by injunction if the gas company attempts to charge a higher rate than that agreed upon.11 An employe who learns trade secrets often agrees not to engage in a competing business during his employment or sometimes within a reasonable period thereafter. Such contracts, if reasonable, are valid,12 and may be enforced by inflection.18 A
11 Linwood Park Co. v. Van Du-sen. 63 0. S. 1S3; 58 X. E. 576.
12 Parker v. Nightingale, 6 All. (Mass.) 341; 83 Am. Dee. 632; Trustees v. Lynch, 70 N. Y. 440: 26 Am. Rep. 615.
13 Salem Flouring Mills Co. v. Lord, 42 Or. 82, 103; 69 Pac. 1033; 70 Pac. 832. (Where the grantee had constructed an underground conduit, which plaintiff could not inspect, and was pumping water through two ten-inch pipes.)
1 Booth v. Davis, 127 Fed. 875; Ragsdale v. Nagle, 106 Cal. 332; 39 Pac. 628; Brown v. Kling, 101 Cal. 295; 35 Pac. 995; O'Neal v. Hines, 145 Ind. 32; 43 N. E. 946; Angier v. Webber, 14 All. (Mass.) 211; 92 Am. Dec. 748; Grow v. Seligman, 47 Mich. 607; 41 Am. Rep. 737; 11 N. W. 404; Flecken-stein Bros. Co. v. Fleckenstein, -
N. J. Eq. - ; 53 Atl. 1043; Diamond Match Co. v. Roeber, 106 N. Y. 473; 60 Am. Rep. 464; 13 N. E. 419; Cowan v. Fairbrother, 118 N. C. 406; 54 Am. St. Rep. 733; 32 L. R. A. 829; 24 S. E. 212; Pittsburg, etc., Co. v. Stove Co., 208 Pa. St. 37; 57 Atl. 77; Wilkinson v. Colley, 164 Pa. St. 35; 26 L. R. A. 114; 30 Atl. 286; Jackson v. Byrnes, 103 Tenn. 698; 54 S. W. 984.
2 McCurry v. Gibson, 108 Ala. 451; 54 Am. St. Rep. 177; 18 So. 806; Timmerman v. Dever, 52 Mich. 34; 50 Am. Rep. 240; 17 N. W. 230; French v. Parker, 16 R. I. 219; 27 Am. St. Rep. 733; 14 Atl. 870.
3 Cook v. Johnson, 47 Conn. 175; 35 Am. Rep. 64.
4 Morgan v. Perhamus, 36 O. S. 517; 38 Am. Rep. 607.
5 Standard Fashion Co. v. Siegel-Cooper Co., 157 N. Y. 60; 68 Am. St. Rep. 749; 43 L. E. A. 854; 51 N". E. 408.
6 Stovall v. McCutehen, 107 Ky. 577; 54 S. W. 960.
7 Ferris v. Brewing Co., 155 Ind. 539; 52 L. R. A. 305; 58 N. E. 701. (Even if the lessor is not the brewing company. See Sec. 1315.)
8 Metropolitan Electric Supply Co. v. Ginder (1901), 2 Ch. 799. (Even if there is no express negative covenant.)
9 Steinau v. Gas Co., 48 O. S. 324; 27 N. E. 545. So of a contract for the exclusive supply of electricity. Dewey Hotel Co. v. Lighting Co., 17 App. D. C. 356.
10 Gallagher v. Gaslight Co.. 141 Cal. 699; 75 Pac. 329.
11 Muncie Natural Gas Co. v. Muncie. 160 Ind. 97: 60 L. R. A. 822; 66 N. E. 436.
12 See Sec. 374.
13 Westervelt v. Paper Co., 154 Ind. 673; 57 N. E. 552; Thum Co. v. Tloczynski, 114 Mich. 149; 68 covenant by one who has accepted and entered into an employ-ment in which he has learned many of his employer's trade secrets not to engage in the same business with any other employer during the term of his employment, within a radius of twelve hundred miles of Chicago, may be enforced by injunction.14 In cases of this sort the ground of relief in equity is the inadequacy of the relief at law. It is perfectly possible for the good will of a business to be ruined, while the unfortunate proprietor thereof may not be able to prove any actual damage as the result of the defendant's wrongful act. Such covenants must be in reasonable restraint of trade. What restraints are reasonable is discussed elsewhere.15 A breach must either be threatened or exist, to justify this remedy. What constitutes a breach of such contracts is elsewhere discussed.16