Restraint of trade in artists, brand ambassador’s contracts

This is a rejoinder to the article,“Restraint of Trade and Artistic Freedom in Nigeria” by Rotimi Fawole, published in Premium Times of 15 February 2016. Fawole’s main argument is that musicians engaged as Brand Ambassadors by telecommunication companies in Nigeria are precluded from working with ambassadors of rival brands on projects that are not in competition. He argues that this is the case even when the brand one ambassador is contracted to promote has no connection with another ambassador’s brand. This, according to him, is an instance of the doctrine of restraint of trade.

I am in agreement with Fawole’s view that the common law doctrine of restraint of trade enjoins a person to carry out legitimate trade in any way or manner he chooses. This contractual theory is anchored on the consent and free will of the parties involved. Thus, any restraint of a person’s right to work is prima facie void. The presumption will be rebutted if the restraint is reasonable with particular reference to the interest of the parties concerned and of the public.

The 1894 English House of the Lords decision in Nordenfelt v Nordenfelt was to the effect that even though general restraint is prima facie void, a restraint may nonetheless be legitimate provided that the party alleging its validity can prove it to be reasonable and in the public interest. The mechanism the court uses to determine whether a restriction is an unenforceable restraint of trade was set out in this case and it is known as the ‘Nordenfelt test’. Initially, the body of law under the doctrine of restraint of trade was developed and made applicable to “solus agreement” only but the 1968 House of Lords decision in Esso Petroleum Co Ltd v Harper’s Garrage (Stourport) Ltd extended the legal frontiers to include musical agreements. Solus agreement refers to those contracts that a party is duty bound to buy his supplies from a single source.

The applicability of the doctrine of restraints of trade in musical contracts was done not to protect the weak or vulnerable from transactions the law considers unfair. That can be taken care under the sphere of doctrine of undue influence. The distinction between undue influence and the doctrine of restraints of trade is blurry, no doubt. Both doctrines are aimed at protecting the interest of artists who enter into restrictive contracts when in a disadvantaged position or with poor bargaining power. That is to say that inequality in the bargaining process is an undercurrent in many of the decisions on restraints of trade relating to the music industry.

The word inequality as used here goes beyond the lexical denotation. H. Beale in his article entitled “Inequality of Bargaining Power” published in the Oxford Journal of Legal Studies (1986,volume 6, number 1, page 123) arguably defines it to be “ignorance, vulnerability to persuasion, desperate need, lack of bargaining skill or simple lack of influence in the market place.” It is the combination of these factors coupled with sale at an under price and lack of proper advice that have compelled the courts to intervene in the process of how such agreements were made, rather than the particular objectives of musical contracts.

This body of law that has evolved for more than forty years is a product of judicial activism developed by the English judges to ameliorate the harshness of the standard form of contracts as a way of protecting the notion of public interest and the right to unfettered trade.