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4 Alta. L. Rev. 480 (1965-1966)
Tying Agreements - Against Public Policy - Petrofina (Great Britain), Ltd. v. Martin

handle is hein.journals/alblr4 and id is 488 raw text is: 480 ALBERTA LAW REVIEW TYING AGREEMENTS-AGAINST PUBLIC POLICY-PETROFINA (GREAT BRITAIN), LTD. v. MARTIN The recent decision of England's Court of Appeal in Petrofina (Great Britain), Ltd. v. Martin1 is concerned with what is undoubtedly one of the most contradictory and conflicting areas of the common law, i.e. re- straint of trade. The case specifically deals with the problem of how far a manufacturer of a product can tie his distributors to dealing only in his product and restrict them from handling those of his competitors. In the present case, the manufacturer is an oil company, Petrofina (Great Britain), Ltd., and the distributor is the local garage outlet. In England, as in Canada, the major oil companies tie the garage outlet to them through tying agreements which take a number of forms. The result, however, is the same in all cases, i.e. the garage proprietor agrees to buy his total requirements of motor fuels from a particular oil company, thus rendering it impossible for him to sell petroleum products of other oil companies. In England, these agreements are referred to as solus agreements, and it is such an agreement which came before the courts in the Petrofina case. In Petrofina (Great Britain), Ltd. v. Martin,2 the defendant bought the garage in question from vendors who had already tied the garage to Petrofina and who were operating at a loss; Martin bought the garage for £16,000 thus leaving the property free from any charge. The ven- dors were bound under their own solus agreement to get Martin to sign a new solus agreement on his own account with Petrofina, which he did. The principal terms of this agreement were as follows: Martin was to buy exclusively from Petrofina all the petrol he required and was not to sell motor fuel manufactured by any other company. He was to sell this fuel at the retail price published by Petrofina' and was to pro- mote the sale of Petrofina lubricating oils and greases and to advertise on the premises only Petrofina's motor fuel. He could stock the oil of other companies but was not to advertise it. Martin was to keep the garage open at all reasonable times for the sale of petrol and oil, and was to maintain an adequate stock. If Martin wanted to sell the garage, he was to give Petrofina the first refusal, and if they did not wish to buy he was not to sell unless he first got the prospective buyer to enter into another solus agreement with Petrofina to carry out all of Martin's obligations. Petrofina in return undertook to supply Martin with its petroleum products, lubricating oils, and greases unless prevented by causes outside its control, and to allow him a rebate of five pounds for every 1,000 gallons of motor fuel purchased by him. The agreement was to continue for twelve years from the time of purchase. If at the end of this period Martin had sold 600,000 gallons of petrol, he could determine the agreement thereafter by three month's notice; however, he could not determine it until he had sold 600,000 gallons. 1 119661 1 All E. R. 126. s This clause is now unenforceable due to the Resale Prices Act 1964, however most dealers continue to sell at recommended prices.

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