Agreements to Co-operate at Common Law

Participants in the resource industry, while generally operating as competitors, will often formalliances to explore co-operatively in a particular area. If such an alliance is undertaken pursuantto a contractual arrangement issues of restraint of trade can arise. Depending upon thecircumstances the restraint may be held to be unenforceable. It is critical that parties to thesearrangements consider the interest that they wish to protect when they form an alliance and thatany restraint agreed to is reasonable to protect that interest. If the parties fail to specify a timeduration for their contractual agreement to co-operate an additional issue arises as to how thecourts will construct their contract. A court might conclude that the parties intended the restraintto be perpetual and conclude that the restraint is unenforceable, if a perpetual restraint isunreasonable in the circumstances. Alternatively a court might conclude that the parties must haveintended that the agreement could be terminated by notice and imply a term to that effect