Smith Ran a Software Design Business

question 142

Multiple Choice

Smith ran a software design business. He needed someone to handle some of the product demonstrations, so he hired Janet to do this work. In the employment contract, he insisted that Janet promise that if she left the firm, she would not work for Smith's competitors within a stated period of time and within a stated geographical region. If Janet now wishes to leave the job, indicate the statement that accurately describes the likely effect of her promise.

• A) Such promises are in restraint of trade and thus the courts invariably hold them to be invalid.
• B) Such promises are invariably held to be valid when they are part of the terms of employment and thus are given in consideration for getting the job.
• C) Such promises are valid only if given under seal.
• D) If the court holds such a promise to be invalid, then the whole employment contract is necessarily void as well.
• E) If the court thinks that such a promise is reasonable between the employer and employee and that the public interest will not be damaged, then it will enforce it.

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Definitions:

Public Goods

Goods that are neither excludable nor rival in consumption.

Private Goods

Goods that are both excludable and rival in consumption.

Industrial Machinery

Machines and equipment designed and used in the manufacturing and production sector.

Factor Of Production

Resources utilized in the creation of goods and services, including land, labor, capital, and entrepreneurship.