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

Question

Quizplus · Accepted Answer

Non-compete clauses, such as those that restrict the seller from competing with the buyer in the sale of a business, are generally enforceable if they are reasonable between the parties and not contrary to public policy. This typically means they must be limited in scope (geographical area and duration) and necessary to protect legitimate business interests.

A Provision That Restricts the Seller from Competing with the Buyer