Beauty Shop Woes.When Janice went to work as a hair stylist in Rick's beauty shop,she entered into an agreement with Rick whereby if she left,she would not work for another beauty shop within 50 miles for 2 years.Rick trained Janice in several new techniques.After nine months,Janice was offered a great job down the street at a new beauty shop,quit Rick,and had a number of customers follow her down the street to her new job.Rick claimed that she had signed a contract and had no right to go to work at the new shop.Janice disagreed and told Rick that no judge in the country would enforce such an agreement.Janice told Rick that she was more worried about a customer,Treena,who was threatening to sue her because her hair turned green after Janice worked on it.Janice agreed that Treena's hair was damaged.Janice pointed out,however,that she told Treena that odd results could result from a dye attempt,and she required that Treena sign a contract releasing Janice from all liability before she did anything with Treena's hair.Treena,however,sued anyway.The agreement Rick and Janice entered into is referred to as which of the following?

A) A competition agreement
B) A prohibited competition agreement
C) A covenant not to misappropriate
D) A policy agreement
E) A covenant not to compete

Question

Krystal Izquierdo · Accepted Answer

Final Answer : E, Explanation :  When a restraint on trade is reasonable,as determined by the courts,the restraint is typically allowed.One example of a permissible restraint on trade is a covenant not to compete in an employment contract,whereby the employee agrees that if she leaves employment,she will not compete with her employer for a designated period of time within a designated geographic area.

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