A restraint of trade is any activity that tends to limit a party's ability to enter into transactions. The term is most commonly used in the context of government antitrust regulation. For example, federally, 15 U.S.C. § 1 prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations.” For example, in American Needle, Inc. v. Nat’l Football League, the U.S. Supreme Court held that licensing activities for individual teams’ intellectual property conducted through a corporation separate from the teams with its own management [i.e. the NFL] fell within a possible restraint of trade covered under 15 U.S.C. § 1. Many states also have their own local restraints on anti-competitive business activity. For example, Massachusetts General Law Ch. 93 § 4 states “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce in the commonwealth shall be unlawful.”
[Last updated in April of 2021 by the Wex Definitions Team]