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Rule of Reason

RULE OF REASON

RULE OF REASON, a judicial principle applicable when the purpose and intent of legislation are open to serious question. Application of the principle has been largely restricted to the interpretation of the Sherman Antitrust Act of 1890. This measure, if taken literally, would be unenforceable, and possibly unconstitutional. To evade the issue of the law's constitutionality, the Supreme Court, in the 1911 cases Standard Oil Company v. United States and United States v. American Tobacco Company, enunciated the rule of reason and used it to conclude that the statutory prohibition of "all combinations in restraint of trade" set forth in the act actually meant "all unreasonable combinations in restraint of trade."

BIBLIOGRAPHY

Letwin, Willam. Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act. Chicago: University of Chicago Press, 1981 [1965].

W. BrookeGraves/f. b.

See alsoRestraint of Trade ; Standard Oil Company of NewJersey v. United States .

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