If Penn Hills Mfg

question 165

Multiple Choice

If Penn Hills Mfg. Corp. gives the Johnstown Distributing Co. the exclusive right to distribute Penn Hills' products in Ohio-with the understanding that Johnstown can't sell Penn Hills' products outside Ohio or to other wholesalers in Ohio, this arrangement:

• A) WOULD DEFINITELY BE ILLEGAL because the courts have ruled that all vertical arrangements between producers and intermediaries are illegal.
• B) MAY OR MAY NOT BE LEGAL-the courts would weigh the possible good effects of this vertical arrangement against possible restrictions on competition.
• C) WOULD DEFINITELY BE LEGAL because the courts have ruled that all vertical arrangements between producers and intermediaries are legal.
• D) WOULD DEFINITELY BE ILLEGAL because the courts have ruled that all horizontal arrangements between competitors are illegal.
• E) WOULD DEFINITELY BE LEGAL because the courts have ruled that all horizontal arrangements between competitors are legal.

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Definitions:

Implied-in-Fact

A type of contract formed by the conduct of the parties involved, rather than written or spoken words.

Implied-in-Law

A term or condition not expressly stated but inferred by the nature of the transaction or the parties' conduct, as recognized by law.

Discharged by Agreement

A situation where the parties involved decide to release each other from the obligations of a contract, effectively ending the contract.

Operation of Law

Changes in legal rights or obligations that occur automatically due to established legal rules, without the need for action by the parties involved.