Question

Gringo's Restaurant is a small restaurant located in a Mesa, Arizona, neighborhood shopping center that has a grocery store (chain) as its anchor tenant. Carl Williams owns Gringo's and has just negotiated its sale to Wilma Freestone. The covenant not to compete provides that Williams will not open a competing restaurant anywhere within a two-mile radius of Gringo's for a period of two years. The noncompete covenant is:

Answer 1

The correct answer is letter "C": probably reasonable and enforceable.

Step-by-step explanation:

In Law, covenants are agreements between two parties that push one of them to refrain from doing certain activities. There are two types of the covenant: covenants running with the land and covenants for title. In Carl's case, it is possible that the covenant provisioned at the moment of selling Gringo's Restaurant to Wilma is reasonable to promote fair competition within a determined area. Therefore, Carl is not allowed to open another restaurant similar to the one he is selling otherwise the covenant in Wilma's contract could be enforced.