Carl Wilton has just sold his Mexican restaurant to Jerry Felt.The restaurant is located in Costa Brava,a city of about 300,000 people.In their sales agreement,a clause provides that Carl will not open another restaurant in Costa Brava for a period of five years.The clause is:

Question

Quizplus · Accepted Answer

The clause in the sales agreement is a covenant not to compete. This is a common provision in sales agreements to protect the buyer from competition from the seller. The clause is generally enforceable as long as it is reasonable in scope and duration. It is not void as against public policy or prohibited under the Sherman Act, as these relate more to antitrust issues and monopolies, which do not seem relevant in this scenario.

Carl Wilton Has Just Sold His Mexican Restaurant to Jerry