Definition
A special restraint of trade is a contractual restriction that prohibits a specific person from engaging in a designated trade, business, or occupation, either within a defined geographic area, for a limited period of time, or both. Unlike a general restraint of trade — which purports to bar a person from any commercial activity altogether — a special restraint is bounded: it targets a particular calling and cabins the restriction by place or duration.
The classic examples are non-compete covenants in employment agreements, business sale agreements, and partnership dissolution terms. An employer may contract with a departing employee that the employee will not solicit clients or practice the same trade within a fifty-mile radius for two years. A purchaser of a business may require the seller to refrain from opening a competing shop in the same city for five years. Both are special restraints of trade in the traditional sense.
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Common Confusion
SPECIAL RESTRAINT vs. GENERAL RESTRAINT OF TRADE: The distinction between special and general restraints is central to how courts historically evaluated enforceability. A general restraint — one with no geographic limit and no time limit — was treated as per se void at common law. A special restraint, because it was bounded, was presumptively subject to a reasonableness inquiry rather than automatic invalidity. Modern antitrust law and contract doctrine have largely absorbed this distinction into broader rule-of-reason analysis, but the binary framing still appears in older cases and treatises and can cause confusion when reading pre-twentieth-century authority. Researchers should not assume that a "special" restraint is automatically enforceable; it is simply eligible for a reasonableness review that a general restraint historically was not.
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Core Elements
A special restraint of trade is traditionally defined by the presence of limiting factors that distinguish it from a general restraint. Courts and commentators have identified three operative constraints:
1. DESIGNATED ACTIVITY: The restriction must target a specific trade, business, profession, or line of work — not all commercial activity. Vague or comprehensive prohibitions shade toward a general restraint.
2. GEOGRAPHIC LIMITATION: The restriction is confined to a prescribed area, district, or territory. Courts assess whether the defined area is reasonably proportionate to the legitimate interest being protected.
3. TEMPORAL LIMITATION: The restriction applies for a defined period. Open-ended or perpetual restrictions attract heightened scrutiny and, at common law, were more readily condemned.
Not every formulation requires all three elements to be present simultaneously, but the presence of at least one limiting boundary — usually geographic or temporal — is what classifies a restraint as "special" rather than "general."
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Why It Matters in Research
The term "special restraint of trade" is a classifier, not a conclusion. Finding this label in a historical case or contract tells a researcher that the drafter or court was invoking the common law framework that separated bounded from unbounded restrictions — a framework that determined which standard of review applied.
Researchers working in pre-twentieth-century case law will encounter this terminology frequently, particularly in English common law decisions and early American state court opinions. The landmark common law rule — that general restraints were void while special restraints could be valid if reasonable — originates in cases like Mitchel v. Reynolds (1711) and was developed extensively by English and American courts through the nineteenth century. The term "special restraint" as used in those sources maps onto what modern practitioners call a "reasonable" non-compete or restrictive covenant.
A critical research trap: modern materials rarely use "special restraint of trade" as a term of art. After the emergence of statutory antitrust law — particularly the Sherman Act in the United States — the vocabulary shifted toward rule-of-reason versus per se analysis. A researcher who searches only for "special restraint" in modern databases will miss the bulk of the contemporary doctrine, which is litigated under the heading of non-compete enforceability, ancillary restraints, or covenant not to compete. Conversely, a researcher reading nineteenth-century sources who does not recognize "special restraint" as the historical counterpart to the modern ancillary restraint doctrine will misread the analytical structure of those opinions.
Jurisdictional variation is also significant for practical research. Several states — California being the most prominent — have by statute largely eliminated the enforceability of non-compete covenants, effectively treating most special restraints of trade as void regardless of their geographic or temporal limits. Researchers should not assume that historical enforceability doctrine translates to any particular modern jurisdiction.
The connection to public policy doctrine is direct. The Law Mind Contracts & Commercial Law Encyclopedia entry on restraint of trade (contracts_12) addresses the full arc from common law classification through the modern enforceability framework, including the treatment of ancillary restraints in business sale and employment contexts.
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Historical Dictionary Support
Black's Law Dictionary defines a special restraint of trade as one "which forbids the person to employ his talents, capital, or industry in a designated trade or business, either for a limited time or within a prescribed area or district." This definition is straightforward and consistent with the common law usage traceable through English and American court decisions. It accurately captures the core elements — designated activity plus at least one limiting boundary — that distinguish the special from the general form.
What Black's definition does not convey is the enforceability consequence that historically attached to the classification. The definition is structural rather than evaluative. Older editions of Black's and contemporaneous treatises — including Addison on Contracts and Parsons on Contracts — make clear that the special/general distinction was not merely taxonomic but was the gateway to two different legal outcomes: per se invalidity for general restraints, reasonableness review for special restraints. Researchers relying on Black's definition alone should supplement with treatise sources to understand the doctrinal weight the classification carried.
No significant divergence across historical dictionary sources on the core definition. The consistent formulation across editions confirms that the term carried a stable technical meaning throughout the common law period.
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Jurisdictional Note
Enforceability of special restraints of trade — now typically litigated as non-compete or restrictive covenant disputes — varies dramatically by jurisdiction. California Business and Professions Code section 16600 renders most non-compete agreements void. Other states apply varying tests for reasonableness of geographic scope, duration, and the adequacy of the protected business interest. Researchers applying historical doctrine to any modern jurisdiction must assess current statutory and case law independently.
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Encyclopedia Cross-Reference
Contracts — Legality and Public Policy (Illegal Contracts, Restraint of Trade), The Law Mind Contracts & Commercial Law Encyclopedia (contracts_12)
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