A Restraint That Is Merely Ancillary to a Contract May

question 30

Multiple Choice

A restraint that is merely ancillary to a contract may be legal if:

• A) it attempts to relieve one party from liability for willful misconduct.
• B) its purpose is to restrict trade indefinitely.
• C) its purpose is to recover punitive damages.
• D) it is designed to protect interests created by the contract.

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Definitions:

Capital Interest

The portion of an investment or equity that represents the initial sum invested or the value contributed by an investor or partner.

Capital Account

A financial record that shows the changes in business ownership over a period. It includes capital contributions and withdrawals by owners.

Partner Capital Accounts

Accounts reflecting the individual investments of partners in a partnership, including their share of profits, losses, and any withdrawals.

Capital Additions

Investments or expenditures made to acquire or improve long-term assets, enhancing the asset value or extending its useful life.