Site navigation

A sells a business and its goodwill to B. A separately agrees to a reasonable local non-compete while B…

The goodwill exception in section 27 lets the court assess whether a specified local restraint is reasonable, given the nature of the business. Section 28(a) makes the…

Choose your answer

A sells a business and its goodwill to B. A separately agrees to a reasonable local non-compete while B operates the business there. A severable clause bars both parties from enforcing any rights under the non-compete in any ordinary court. What is the legal effect of that clause?

Select one answer
Answer and explanation

Correct answer D

The goodwill exception in section 27 lets the court assess whether a specified local restraint is reasonable, given the nature of the business.

Section 28(a) makes the severable clause that absolutely bars ordinary proceedings void to that extent.

Option feedback

Option A

The clause is expressly severable. Section 28(a) does not invalidate the rest of the sale merely because this clause is void.

Option B

Section 28(a) makes an absolute restraint void to the extent of the restriction. It does not confer an election to avoid the sale.

Option C

The prohibition operates by law and does not give the seller an election to avoid the non-compete.

Option D

An absolute bar on enforcing contractual rights in the ordinary courts is void to the extent of the restriction under section 28(a).

Practice for these exams

Related question papers

Related exam syllabi

Related questions in this topic