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) Any such attempt to restrict competition is illegal and, no matter how reasonable the terms are, the provision will be void.
C) The time period of the restrictive covenant is too broad and would be found to be void or non-enforceable.
D) 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.
E) These terms are enforceable no matter how unreasonable because they are part of the bargain struck.

Question

Quizplus · Accepted Answer

The Answer of 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) Any such attempt to restrict competition is illegal and, no matter how reasonable the terms are, the provision will be void.
C) The time period of the restrictive covenant is too broad and would be found to be void or non-enforceable.
D) 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.
E) These terms are enforceable no matter how unreasonable because they are part of the bargain struck.

Jones Entered into a Contract for the Sale of His