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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

The courts have ruled that it is a reasonable restraint of trade (and therefore permissible) for the owner of a business to sell his business and sign a contract with the new owner saying that he will not compete with her within a vicinity of, say, 100 miles, for a period of, say, 5 years. If this type of contract is a reasonable restraint of trade, can you give an example of what you would consider an unreasonable restraint of trade? Explain how you decide what is a reasonable restraint of trade and what isn’t.

To determine

Explain the reasonable restraint of trade and the contract is reasonable restraint of trade or unreasonable restraint of trade.

Explanation

According to the scenario, the contract is an example of unreasonable restraint of trade because the nature of unreasonable restraint of trade is to reduce the competition among the industries. In this case, it restricts the competition within 100 miles for a period of 5 years...

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