A Provision That Restricts the Seller from Competing with the Buyer

question 149

Multiple Choice

A provision that restricts the seller from competing with the buyer in a contract for the sale of a business is

• A) always enforceable because the parties to a contract have the freedom to contract as they see fit.
• B) always unenforceable because any attempt to restrict competition is an illegal restraint of trade.
• C) fatal to the whole contract (i.e., it causes the whole contract to fail).
• D) enforceable if it is reasonable between the parties, which means that it must be limited in time (e.g., one year) but need not be limited in area.
• E) enforceable if it is reasonable between the parties and not contrary to public policy.

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Definitions:

Moral Turpitude

Conduct that is considered contrary to community standards of justice, honesty, or good morals.

Loathsome Disease

Historically referred to communicable diseases considered dangerous and highly contagious, often requiring quarantine; now less commonly used terminology.

Trespass to Personal Property

An intentional interference with someone's personal property without the owner's consent.

Conversion

An unauthorized act that deprives an owner of personal property without their consent.