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A, B and C are partners in a firm. When C retires, A and B restrict C not to do the same business for 3 years. The contract is: 
  • a)
    Valid 
  • b)
    Voidable 
  • c)
    Void
  • d)
    None 
Correct answer is option 'A'. Can you explain this answer?
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A, B and C are partners in a firm. When C retires, A and B restrict C ...
 
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A, B and C are partners in a firm. When C retires, A and B restrict C ...
The contract so made is valid if only the restrictions imposed are reasonable . The reason behind this is that if c ( out going partner) carry on a similar business , the business of the former ( ie., A&B) will be affected .,like , there is also a chance that c may convince the customers of prior business and turn them up into his (C's ) customers , if customers aren't aware of his ( C's ) retirement from the former business.
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A, B and C are partners in a firm. When C retires, A and B restrict C ...
Validity of the contract:

The contract between A, B, and C restricts C from engaging in the same business after retirement for a period of 3 years. In order to determine the validity of this contract, we need to consider certain legal principles.

Legality of the restriction:

One of the key factors in determining the validity of a contract is whether the terms of the contract are legal. In this case, the restriction imposed on C not to engage in the same business after retirement for a period of 3 years is a restrictive covenant.

Enforceability of restrictive covenants:

Restrictive covenants are generally considered to be in restraint of trade and are not favored by the law. However, they may be enforceable if they meet certain criteria:

1. Reasonableness: The restriction must be reasonable in terms of its duration, geographical area, and scope of activity. In this case, the restriction is for a period of 3 years, which could be considered reasonable depending on the nature of the business and the time required for A and B to establish themselves without competition from C.

2. Protection of legitimate business interests: The restriction must be designed to protect legitimate business interests such as trade secrets, confidential information, customer relationships, or goodwill. If A and B can demonstrate that C's involvement in the same business after retirement would harm their legitimate business interests, the restriction may be enforceable.

3. Public interest: The restriction must not be against public policy or contrary to public interest. If the restriction is reasonable and does not harm public interest, it is more likely to be enforceable.

Conclusion:

Based on the information provided, the contract between A, B, and C appears to be valid. The restriction on C from engaging in the same business for 3 years after retirement is likely to be enforceable if it is deemed reasonable and necessary to protect the legitimate business interests of A and B. However, it is important to note that the final determination of the contract's validity would depend on the specific circumstances, applicable laws, and judicial interpretation in the relevant jurisdiction.
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A, B and C are partners in a firm. When C retires, A and B restrict C not to do the same business for 3 years. The contract is:a)Validb)Voidablec)Voidd)NoneCorrect answer is option 'A'. Can you explain this answer?
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A, B and C are partners in a firm. When C retires, A and B restrict C not to do the same business for 3 years. The contract is:a)Validb)Voidablec)Voidd)NoneCorrect answer is option 'A'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A, B and C are partners in a firm. When C retires, A and B restrict C not to do the same business for 3 years. The contract is:a)Validb)Voidablec)Voidd)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C are partners in a firm. When C retires, A and B restrict C not to do the same business for 3 years. The contract is:a)Validb)Voidablec)Voidd)NoneCorrect answer is option 'A'. Can you explain this answer?.
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