Business Law: Principles for Today's Commercial Environment 3rd Edition by Marianne Moody Jennings, David Twomey, Marianne Jennings

Exercise 6

Central Water Works Supply, a corporation, had a contract with its shareholders that they would not compete with it. There were only four shareholders, of whom William Fisher was one, but he was not an employee of the corporation. When he sold his shares in the corporation and began to compete with it, the corporation went to court to obtain an injunction to stop such competition. Fisher claimed that the corporation was not entitled to an injunction because he had not obtained any confidential information or made customer contacts. The corporation claimed that such matters were relevant only when an employee had agreed not to compete but were not applicable when there was a noncompetitive covenant in the sale of a business and that the sale-of-a-business rule should be applied to a shareholder. Who was correct