Carl Was Employed as a Landscape Designer with Splendid Gardens

question 3

Multiple Choice

Carl was employed as a landscape designer with Splendid Gardens Landscape and Design firm in Winston-Salem, North Carolina. He signed a covenant not to compete agreement when he was hired 2 years ago. The agreement states that Carl cannot work in Splendid's territory for 1 year after his employment ends. The agreement stipulates that Splendid's territory constitutes a 30 mile radius of Winston-Salem, N.C. Carl has been working part-time for himself. When his employer finds out, he is terminated. Carl wants to take a new position with Harold's Garden in Greensboro, North Carolina which is 20 miles away.

• A) Carl can take the job because he did not understand the consequences of the covenant not to compete clause.
• B) Carl can take the job because even though Harold's is in Splendid's territory, he is not planning on contacting any of his former clients.
• C) Carl cannot take the job if the geographical and time restrictions are deemed to be reasonable by the courts.
• D) None of the choices are correct.

---

Definitions:

Operating Income

The profit earned from a firm's normal core business operations, excluding deductions of interest and taxes.

Fixed Costs

Expenses that do not change in proportion to the volume of goods or services a company produces.

Capacity

The maximum output or producing ability of a plant, machine, or company under normal or specific conditions.

Operating Profit

The earnings before interest and taxes (EBIT) generated from a company's core business operations.