Goodwill as applied to individuals means the good reputation he builds up by doing good work. Mere reputation or eminence of an individual is not goodwill.
Goodwill as applied to business it the reputation the business builds up for its services to the customers and the public. While goodwill of the individual cannot be computed in terms of money, the goodwill of business can be estimated taking into consideration its capital, stock, funds and other property it holds. Goodwill is an intangible asset capable of being transferred. Goodwill by itself cannot be transferred to any other person without the transfer of business. Goodwill by itself though a property cannot be transferred. In recent times brands are being sold for value and purchased paying high consideration. Here also what is transferred is not more goodwill, but the whole of technology and the products covered by the brand.
In case where a partnership is dissolved, the goodwill may be sold separately as one of the assets, the proceeds of which may be distributed among the partners. While transferring the goodwill along with the business the contracting parties may agree that the person selling goodwill shall not carry on the same business for certain limited period. Such a term will not amount to restraint of trade.
[Ref.: Khushal Khengar Shah v. Khurshid Banu, AIR 1970 SC 1147; State of Rajasthan v. Bundi Electrics Supply Company, AIR 1970 Raj. 36; Section 14 of the Indian Partnership Act, 1932; Section 27 of Indian Contract Act, 1877.]