Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

Exercise 21

Covenants Not to Compete. Joseph, who owns the only pizza parlor in Middletown, learns that Giovanni is about to open a competing pizza parlor in the same small town, just a few blocks from Joseph's restaurant. Joseph offers Giovanni $10,000 in return for Giovanni's promise not to open a pizza parlor in the Middletown area. Giovanni accepts the $10,000 but goes ahead with his plans, in spite of the agreement. When Giovanni opens his restaurant for business, Joseph sues to enjoin (prevent) Giovanni's continued operation of his restaurant or to recover the $10,000. The court denies recovery. On what basis? (See Legality.)