Jones Entered into a Contract for the Sale of His

question 97

Multiple Choice

Jones entered into a contract for the sale of his barber shop to Harry Cutter. One of the terms of the contract was that Jones would never open up a similar business within 50 kilometres of the location of the barber shop being sold. About two weeks after the sale, Cutter noticed a new barber shop opening across the street with brand-new facilities and equipment. When he learned that the owner of the new shop was the very Jones who sold the business to him, he sued for breach of contract. Which of the following correctly indicates the legal position of the parties?

• A) If the 50 kilometres is determined to be reasonable, this restriction will be valid and Harry Cutter will succeed.
• B) The term is too broad and would be found to be void or non-enforceable.
• C) These terms are enforceable no matter how unreasonable because they are part of the bargain struck.
• D) Any such attempt to restrict competition is illegal and, no matter how reasonable the terms are, the provision will be void.
• E) The whole contract for the sale of the business is void because of the illegal term, and therefore Harry will be able to force Jones to take his barber shop back and return the purchase price.

Understand the concept of technology spillovers and their implication for government policy.

Analyze the effects of public goods and positive externalities on market outcomes.

Understand the concept of pollution permits and their role in controlling pollution levels.

Recognize the difference between equilibrium quantity and socially optimal quantity in the presence of externalities.

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Definitions:

Cost Structure

The relative proportion of fixed, variable, and mixed costs in an organization.

Unit Product Cost

The total cost to produce one unit of product, including direct materials, direct labor, and manufacturing overhead.

Common Fixed Expenses

Expenses that remain constant in total amount and are not affected by changes in business activity level, shared across multiple business segments or products.

Business Segments

Parts of a company that can be separately identified by products provided or by geographic markets, allowing for analysis of the different areas of a business.