Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269
Tie in agreement for 21 years was an unreasonable restraint on trade
Facts
The appellant entered into two agreements for the supply of motor fuel to the respondents. The respondents agreed to a tie-in agreement not to resell motor fuels except in accordance with the appellants’ retail schedule prices, not to operate any discount scheme and to keep their garages open for reasonable hours. The period of agreement at one garage was 4 years and 5 months and at the other garage there was a solus agreement for 21 years and a mortgage with a tie covenant which forbade redemption for 21 years.
Issues
Thereafter, the appellants wrote to the respondents stating that they would not insist on the implementation of the resale price maintenance clauses in the contracts. The respondents replied that they deemed the agreements null and void by virtue of the removal of these clauses. The respondents began to sell another brand of petrol. The appellants sought injunctions. At first instance, judgment was given for the appellants. The respondents were successful in the Court of Appeal.
Decision/Outcome
The House of Lords held that the doctrine of restraint of trade applied to both garages. It was noted that the existence of a mortgage did not exclude the doctrine of restraint of trade. The shorter period of 4 years and 5 months was valid, so that the tie-in agreement. However, the longer period of 21 years went beyond any period for which developments were reasonably foreseeable and in the absence of evidence of some advantage to the appellants for which a shorter period would not be adequate, the agreement was void.
Updated 19 March 2026
This article accurately summarises the House of Lords decision in Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269, which remains good law. The case continues to be the leading authority on the application of the restraint of trade doctrine to solus agreements and tied petrol station arrangements, and the core principles it established — including that a mortgage does not exclude the doctrine, and that reasonableness is assessed by reference to the duration and legitimate interests of the parties — remain undisturbed by subsequent legislation or case law. The Resale Prices Act 1976 (which consolidated earlier legislation) and later the Competition Act 1998 have since significantly altered the broader legal landscape governing resale price maintenance and vertical agreements, meaning that the specific commercial context in which this dispute arose is now largely of historical interest. However, the restraint of trade principles affirmed by the House of Lords remain applicable and are still regularly cited in contract law. Readers should note that modern vertical agreements in the UK are now primarily assessed under the Competition Act 1998 and retained EU-derived block exemption frameworks (as retained and adapted post-Brexit), but this does not affect the continuing authority of this case as a foundational restraint of trade decision.
