Lightning Cycles, Inc., makes Lightning-brand motorcycles and accessories, which are distributed to authorized dealers, including Macho Motors, Inc. Macho operates dealerships in several locations. Lightning imposes territorial restrictions on Macho to insulate other dealers from direct competition. This is

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Quizplus · Accepted Answer

The territorial restrictions imposed by Lightning Cycles on Macho Motors constitute a vertical restraint as it is a restriction on how the dealer can sell or distribute the manufacturer's products. More specifically, it is a form of vertical non-price restraint known as territorial or customer restrictions that limits where or to whom Macho can sell the Lightning motorcycles and accessories. This is legal as long as it does not result in an undue restraint on trade.