Johnny has the largest tire selling business in the city.He learns that Hank is thinking of opening a competing tire selling business.Johnny gives Hank $25,000 to not open his proposed business in the same city.Which statement is correct?

Question

Quizplus · Accepted Answer

The contract is an illegal restraint of trade and is therefore void. It goes against public policy to prevent someone from opening a business in the same industry within a specific geographical area. This type of agreement is also known as a noncompete clause, and it is typically unenforceable if it is considered unreasonable or unfair to the person being restricted. In this case, Johnny is paying Hank to not open a business, which violates competition laws and would limit consumer choice.

Johnny Has the Largest Tire Selling Business in the City