Question

Traci was a children's day-care provider for several years in the small town of Camden. She decided to give it all up and move to Chicago. She sold her business to Zach, agreeing not to open a competing business within two miles of Camden for a period of six months. After four months of the big city life, Traci was tired and ready to move back to Camden. She opened a children's indoor playground with inflatable play areas, with a parents' area where they could watch their children play. Zach sues on the noncompete clause. What is the most likely result?

Answer 1

Traci could potentially be in breach of the noncompete clause if her children's indoor playground is considered a competing business to the daycare she sold to Zach, which would depend on the agreement's terms and local law interpretations.

Step-by-step explanation:

Based on the facts provided, the most likely result of Zach suing Traci on the noncompete clause would depend on the specific wording of the agreement and local business laws, as well as whether the new business is deemed a direct competitor of the daycare. The covenant not to compete was clear about not opening a competing business within two miles of Camden for six months. If a court deems that an indoor playground with inflatable play areas is a competing business to a children's daycare, especially since both serve the same customer base (families with children), Traci may be in breach of contract. There might also be consideration of whether the radius restriction and the timespan are reasonable and enforceable in the local jurisdiction. Again, assuming the language of the noncompete is interpreted to include such a business, then Traci is likely to be found in violation of the agreement, potentially leading to legal repercussions such as cessation of her new business activities or monetary damages awarded to Zach.