The two common situations where a covenant not to compete can be found valid are in connection with:
A) the sale of a business and contracts involving risky activities.
B) employment contracts and gambling contracts.
C) contracts for the sale of goods and agreements between competitors in highly competitive industries.
D) the sale of a business and employment contracts.
E) employment contracts and contracts involving risky activities.

Question

Quizplus · Accepted Answer

Covenants not to compete are most commonly found valid in two situations: in connection with the sale of a business and in employment contracts. In the sale of a business context, the restriction is limited in time, scope, and geography. Similarly, in employment contracts, covenants not to compete are valid if they are necessary to protect the employer's legitimate interests, limited in duration, scope, and area, and reasonable.

The Two Common Situations Where a Covenant Not to Compete