Trade Secrets under Contract Law

No clear legislation as far as Trade Secret and Confidential Information is protected by law in India. The mechanisms from which courts in India have secured trade secrets and other important knowledge are the concepts of justice and common law violation and contractual obligations. It is from Section 27 of the Indian Contract Act, 1872 that explains that the trade-restraint arrangement is void.[1]

Section 27 is general in its terms and states that all trade-restraint agreements, except as stated, are void pro tanto. Special trade security won't add additional technologies to keep the knowledge safe. This section was initially highly restrictive in declaring trade controls null and void, both general and partial. However, it is also important to remember here that the law was implemented at a time when trade was at the point of growth and the purpose underlying the provision was, in fact, to protect trade from restrictions.

There is no reason why a more liberal approach should not be taken by recognizing that certain restrictions are fair for trading laws in India while trading here was at the stage of growth. After considering the above factors, the Law Commission of India proposed in 1958 that the following paragraph be added to the main section:... except to the degree that the restraint is fair in view of the interests of the parties to the agreements and the public.[2]

          It is pertinent to note that India's Law Commission in its decision on trade secret security was                  beyond time. The above recommendations require a fair restriction on India's right to carry on               trade and encourage commercial secret law.

[1] Pollock and Mulla, The Indian Contract and Specific Relief Acts, 817-823 (Vol 1, 12th edn, Butterworths, New Delhi 2004).

[2] The Law Commission of India’s 13th Report, Ministry of Law and Justice (1958), Para 56.


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