A provision that restricts the seller from competing with the buyer in a contract for the sale of a business is
A) enforceable if it is reasonable between the parties, which means that it must be limited in time (e.g., one year) but need not be limited in area.
B) enforceable if it is reasonable between the parties and not contrary to public policy.
C) always unenforceable because any attempt to restrict competition is an illegal restraint of trade.
D) fatal to the whole contract, i.e., it causes the whole contract to fail.
E) always enforceable because the parties to a contract have the freedom to contract as they see fit.

Question

Quizplus · Accepted Answer

A provision that restricts the seller from competing with the buyer in a contract for the sale of a business is enforceable if it is reasonable between the parties and not contrary to public policy. This means that the provision must be limited in time and/or area to the extent that it is necessary to protect the legitimate interests of the buyer, but it cannot be so restrictive as to prevent the seller from earning a living or to run contrary to the public interest. Therefore, choice B is the best answer.

A Provision That Restricts the Seller from Competing with the Buyer