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.