Lawer Entered into a Contract for the Sale of His

Multiple Choice

Lawer entered into a contract for the sale of his business, a barbershop, to Cutter. The contract provided that Lawer would not open up a similar business within 25 kilometres of the barbershop being sold. About two weeks after the sale, Cutter noticed a new barbershop opening across the street in brand-new facilities. When he learned that the owner of the new shop was the very Lawer who sold the business to him, he sued for breach of contract. Which of the following correctly indicates the legal position of the parties?

A) The court needs to determine only that the distance of 25 kilometres is reasonable; if it does, the restriction is valid and Cutter will succeed.
B) Any attempt to restrict competition is illegal, and no matter how reasonable the terms are, the provision will be void.
C) The provision will be void as it is broader than necessary to protect the goodwill of the business.
D) If the restriction is illegal, the whole contract for the sale and purchase of the business is necessarily void and Cutter can return the barbershop for the return of the purchase price.
E) To determine whether or not the restriction is binding, the court asks only one question: does it reduce competition?