Blue pencil test
From Wikipedia, the free encyclopedia
The 'blue pencil' test is a method by which UK Courts have been known to judge contractual disputes where phrases, which are flawed but not fundamental, can be struck out. The text is reread and, if the amended version continues to make sense, that part can be enforced in law.
A pertinent example is Nordenfelt v Maxim, Nordenfelt Gun Co [1894] AC 535. Nordenfelt a manufacturer specialising in armourments, sold his business to Hiram Maxim. It was agreed that Nordenfelt ‘would not make guns or ammunition anywhere in the world, and would not compete with Maxim in any way’.
Court action based on the legal concept of restraint of trade followed. It was held
- The restraint concerning the manufacture of guns and ammunition was reasonable.
- The restraint covering other forms of competition was unreasonable.
The Court applied the blue pencil test and judgement was reached on the agreement that Nordenfelt ‘would not make guns or ammunition anywhere in the world , and would not compete with Maxim in any way ’. ie Nordenfelt would not make guns or ammunition anywhere in the world.
[edit] References
Study Pack Chapter L7 LAW OF CONTRACT III published by Financial Training
