The seller, which had national and international goodwill in its business, now begins the manufacture of such machines contrary to its agreement. Should the court enjoin it? Explain.
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The Dear Corporation was engaged in the business of making and selling harvesting machines. It sold everything pertaining to its business to the ABC Company, agreeing “not again to go into the manufacture of harvesting machines anywhere in the United States.” The seller, which had national and international goodwill in its business, now begins the manufacture of such machines contrary to its agreement. Should the court enjoin it? Explain. |
Explanation
It is not fair to restrict a company from conducting business in the whole country for unlimited time. Since the contract only restricts the manufacturing of machines, the court can allow Company D to conduct the business of purchasing and selling the machines in the country.
Verified Answer
The contract is to restrict the manufacturing of machines in the country but Company D continues to manufacture the same. The restriction is also not for a specific time frame and applies to the whole country. So, the final verdict of the court may order Company D to stop the manufacturing but Company D can be allowed to sell the machines in any part of the country.
