An agreement between the buyer and seller of goodwill whereby the seller agrees not to carry on business within specified local limits so long as the buyer or his representatives carry on the business is valid provided __________________.

The restriction relates to similar business only

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Geographical area is specified

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Restriction applies only up to the period during the buyer or his representatives carry on the business

No worries! We‘ve got your back. Try BYJU‘S free classes today!

All the three

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Open in App

Solution

The correct option is C All the three
As per section 27 of the Contract Act, every agreement by which anyone is restrained from exercising a lawful profession or trade or business of any kind, is to that extent void. However there is exception to this rule in the same section which says : : One who sells goodwill of a business with a buyer to refrain from carrying on a similar business, within specified local limits so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein provided that such limits appear to the Court reasonable, regard being had to the nature of business. Hence, ans is (D)

Suggest Corrections

Similar questions

Q. Legal Principle: Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, to that extent is void.

Factual Situation: A sells goodwill of his business to B, and agrees with him to refrain from carrying on a similar business within specified local limits.
Issue: Is the agreement valid?

Q. X and Y are partners. They decided to dissolve their firm. After dissolution they sold the goodwill of firm to W. State the legal position of the following acts:
Case (a): Can X or Y carry on a business competing with that of W?
Case (b): Can X or Y advertise: such business?
Case (C): Can X or Y .use the firm name if there. is no agreement l between .them and LIP?
Case (d): an X or Y represent himself as carrying on firms business it there is no agreement between them and W?
Case (e) Can X or Y solicit the business from the customers of dissolved firm if there is no agreement between them and Vi?
Case (f): Can X or Y make an agreement with W that either of them will not carry on any business similar to that of a firm within a specified period or within specified limits?

State True or False. E-business helps the seller to access the global market, and on the other hand for the buyers a freedom to choose products from almost any part of the world.

Q. Legal Principle: Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, to that extent is void.

Factual Situation: A contracts to sell to B the goodwill of a business. A then sets up a similar business close by B's shop and solicits his customers. This is contrary to the contract.
Issue: Can B obtain an injunction to restrain A from soliciting customers?

Q. Choose the correct option.

Statement 1: For a market to function, the presence of potential sellers is as important as the presence of potential buyers.

Statement 2: There must exist a business relationship between the potential sellers and buyers, else the market may collapse.

Join BYJU'S Learning Program