ules and definitions is
claimed, the purpose to make the departure should be clearly
shown. Such a purpose does not appear and such a departure was
not intended.

[Footnote 1: _United States v. Trans-Missouri Association_, 166 U.S.,
290.]

[Footnote 2: _Northern Securities Company v. United States_, 193 U.S.,
197.]

Nevertheless, the troublesome question remained, to plague lawyers and
the community generally, until it was finally put at rest and the
statute once more planted on the firm ground of common-law rule and
definition by the decisions in the Standard Oil and Tobacco cases.

What, then, is this common-law rule which President Taft found so clear?
No one has discussed it more lucidly than did the youthful Circuit Judge
Taft himself in delivering the opinion of the Circuit Court of Appeals
in the Addyston Pipe & Steel Co. case,[1] an opinion in which his two
associates on the bench, the late Justices Harlan and Lurton, concurred.
The rule may be briefly stated as follows:

Every contract or combination whose primary purpose and effect is to fix
prices, limit production, or otherwise restrain trade is unlawful,
provided the restraint be direct, material, and substantial.

Where, however, the restraint of trade is not direct, but merely
ancillary or collateral to some lawful contract or transaction, it is
not unlawful, provided it is _reasonable_, that is to say, not broader
than is required for the protection of the party in whose favor the
restraint is imposed.

[Footnote 1: _United States v. Addyston Pipe & Steel Co._, 85 Fed. Rep.,
271.]

A familiar illustration is the sale of a business and its goodwill,
accompanied by a covenant on the part of the vendor not to compete. Such
a covenant is collateral to the sale, and if not broader than is
reasonably required for the protection of the vendee it will be upheld,
although a similar agreement, standing alone and not collateral to a
sale or other lawful transaction, would be in direct restraint of trade
and unlawful.

So much for the alleged uncertainty of the law. Candid men must agree
with President Taft that in the light of the Supreme Court decisions it
is reasonably clear what the Sherman Law means. But the fact that "the
business community now knows or ought to know where it stands" with
respect to the law does not greatly help the business situation. The
real difficulty lies, not in the uncertainty of the law, but in the fact
that