Which of the following is not an agreement in restraint of trade?
1. A sells the goodwill of his business with an agreement not to carry on a similar business within specified local limits, so long as the buyer carries on a similar business.
2. A sells the goodwill of his business with an agreement not to carry on a similar business within India, so long as the buyer carries on a similar business.
3. A sells the goodwill of his business with an agreement not to practice the same trade for 25 years.
4. A sells the goodwill of his business with an agreement not to engage in any business competing or liable to compete in any way with the business for the time being carried on by the buyer.
A. 1, 3 and 4
B. 2, 3 and 4
C. 3 and 4
D. 1 and 3
Answer: Option D
Solution (By Examveda Team)
As per Section 27 of the Indian Contract Act, 1872, any agreement that restrains a person from exercising a lawful profession, trade, or business is void, except for the sale of goodwill under reasonable restrictions.Statement 1 is not an agreement in restraint of trade because a seller can agree not to carry on a similar business within specified local limits, as long as the restriction is reasonable.
Statement 3 is also not an agreement in restraint of trade since the restriction is based on a voluntary goodwill sale agreement, making it enforceable under reasonable limits.
Statement 2 and 4 are agreements in restraint of trade because imposing a nationwide or unlimited restriction is excessive and void under Indian law.
This Question Belongs to Law >> Indian Contract Act
Join The Discussion
Comments (1)
Indian Contract Act:- Gods displayed in showcase of a shop with price tag is -
A. Invitation to offer
B. Counteroffer
C. Communication
D. None of these
A. Is available to Y's representatives alone
B. Is available to Z alone
C. Is available to Y's representatives & Z both
D. Is available to Y's representatives & after the death of Z, his representatives
Moses v. Macferlan (1555-1774) is a case relating to
A. Theory of unjust enrichment
B. The right of lien
C. Test of agency
D. Doctrine of frustration
A. The active concealment of a fact by one having knowledge or belief of the fact
B. A promise made without any intention of performing it
C. The suggestion, as a fact, of that which is true, by one who does believe it to be true
D. None above
Explain the question