Oates v. Leonard - 191 Iowa 1004, 183 N.W. 462 (1921)

Rule:

Contracts in restraint or partial restraint of trade are not favored, and will be strictly construed, so as not to unduly or unreasonably extend the restriction beyond the expressed or fairly implied intention of the parties. A contract of this nature can be construed to be legal only so far as to afford ample protection to the party in whose favor it is imposed, while, at the same time, it is in no way injurious to the public.

Facts:

The parties were all physicians. The defendant seller conveyed his practice to the plaintiff buyers and agreed in the sale contract not to practice medicine or surgery in the town or surrounding country for a period of 10 years. The seller did not maintain an office or drug store after the execution of the contract. The buyers claimed that the seller breached the noncompetition clause of the contract by writing prescriptions and continuing to attend women in childbirth and others needing medical care. The trial court dismissed the buyers' petition, finding no breach. The buyers appealed. 

Issue:

By writing prescriptions and continuing to attend women in childbirth and others needing medical care, did the defendant breach the parties’ sale contract? 

Answer:

No.

Conclusion:

On appeal, the court held that the seller, as a physician, was not in breach of the contract when he acted in an emergency and another doctor could not be secured. The court found that such contract restraining trade or competition was only legal so far as to afford ample protection to the buyers, and was in no way injurious to the public. The court found that the buyers showed no violation of the contract as to work irreparable injury to them.