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 In which of the following agreements, restraint of trade is valid?
  • a)
    Agreement with buyer of goodwill
  • b)
    Trade combinations, to the extent they do not create monopoly or opposed to public policy
  • c)
    Agreements under the partnership Act, 1932
  • d)
    All of the above
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
In which of the following agreements, restraint of trade is valid?a)Ag...
Validity of Restraint of Trade in Different Agreements

Introduction:
Restraint of trade refers to an agreement between parties where one party agrees to restrict his freedom to carry on trade or business with others. Such agreements are generally considered void as they are against public policy. However, there are certain agreements where restraint of trade is considered valid.

Agreements with Buyer of Goodwill:
When a business is sold along with its goodwill, the seller may restrict himself from carrying on a similar business within a specified geographical area or for a specified period. Such a restraint of trade is valid as it is necessary for protecting the goodwill of the business and preventing the seller from competing with the buyer.

Trade Combinations:
Trade combinations between different firms may sometimes require them to agree to a certain degree of restraint of trade. For example, two firms may agree not to compete with each other in a particular market to avoid excessive competition. Such agreements are valid as long as they do not create a monopoly or are not opposed to public policy.

Agreements under Partnership Act, 1932:
The Partnership Act, 1932 allows partners to agree to a certain degree of restraint of trade. Partners may agree not to carry on a similar business within a specified geographical area or for a specified period after the dissolution of the partnership. Such agreements are valid if they are reasonable and necessary for protecting the interests of the partnership.

Conclusion:
In conclusion, restraint of trade agreements may be valid in certain circumstances such as agreements with buyers of goodwill, trade combinations, and agreements under the Partnership Act, 1932. However, the validity of such agreements depends on their reasonableness and necessity for protecting the interests of the parties involved.
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Community Answer
In which of the following agreements, restraint of trade is valid?a)Ag...
Agreement of restraint in trade is void only when the imposed conditions are not reasonable.

Purchaser of goodwill can make an agreement of restraint in trade with the seller provided that the conditions imposed are reasonable

Trade combinations not opposing public policy is valid

In partnership act,1932, there is a separate provision regarding agreement in restraint of trade whenever an outgoing partner carry on a competing business.
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In which of the following agreements, restraint of trade is valid?a)Agreement with buyer of goodwillb)Trade combinations, to the extent they do not create monopoly or opposed to public policyc)Agreements under the partnership Act, 1932d)All of the aboveCorrect answer is option 'D'. Can you explain this answer?
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In which of the following agreements, restraint of trade is valid?a)Agreement with buyer of goodwillb)Trade combinations, to the extent they do not create monopoly or opposed to public policyc)Agreements under the partnership Act, 1932d)All of the aboveCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about In which of the following agreements, restraint of trade is valid?a)Agreement with buyer of goodwillb)Trade combinations, to the extent they do not create monopoly or opposed to public policyc)Agreements under the partnership Act, 1932d)All of the aboveCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In which of the following agreements, restraint of trade is valid?a)Agreement with buyer of goodwillb)Trade combinations, to the extent they do not create monopoly or opposed to public policyc)Agreements under the partnership Act, 1932d)All of the aboveCorrect answer is option 'D'. Can you explain this answer?.
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