Asked by
Andrew Weeks
on Dec 18, 2024
Verified
X sold his retail clothing business to Y. The business was located in a small town, and most of the customers lived within a radius of eight kilometres of the clothing shop. As a part of the sale agreement, X agreed not to set up a similar business in competition with Y for a period of five years or within a radius of eight kilometres of the shop. A court will strike down an unreasonable restriction, and thereby leave the purchaser unprotected from competition from the seller.
Unreasonable Restriction
A limitation or condition imposed upon an activity or behavior that is excessive or unjustified, often subject to legal scrutiny.
Purchaser
An individual or entity that acquires goods or services in exchange for payment.
Competition
The rivalry among businesses to attract customers, improve offerings, and achieve a higher market share.
- Recognize the impact that restrictive covenants and competition regulations exert on business activities.
Verified Answer
JJ
Learning Objectives
- Recognize the impact that restrictive covenants and competition regulations exert on business activities.