| Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd | |
|---|---|
| Court | House of Lords |
| Citation(s) | [1894] AC 535 |
| Keywords | |
| Restraint of trade, competition law, illegality | |
Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 is a 19th century English case decided by the House of Lords. It defines the "Blue pencil doctrine" as a method for deciding whether contractual obligations can be partially enforced when the obligation as drafted in the contract has an element of illegality. The dispute was about restraint of trade.
Contents |
Thorsten Nordenfelt, a manufacturer specialising in armaments, had sold his business to Hiram Stevens Maxim. They had agreed that Nordenfelt ‘would not make guns or ammunition anywhere in the world, and would not compete with Maxim in any way for a period of 25 years’.
The House of Lords held that:
The question on severability was whether the reasonable restriction could be enforced when it was in the same contract as an unreasonable and unenforceable restriction. The court used the test of whether striking out (with a blue pencil) words containing unreasonable provisions would leave behind a contractual obligation that still made sense. If it did, then the amended contract would be enforced by the court.
In this case, the unreasonable restraint was severable, and the court enforced the amended agreement that Nordenfelt "for the next 25 years, would not make guns or ammunition anywhere in the world , and would not compete with Maxim in any way ."