Question

Given below is a statement of legal principle followed by factual situations. Apply the principle to the facts and select the most appropriate answer.

PRINCIPLE Every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, to that extent is void.

FACTUAL SITUATION A company entered into a contract with Coca Cola Ltd. to bottle soft drinks produced by Coca Cola. One of the terms of the contract was that the company would not bottle soft drinks for any other competitor of Coca Cola during the pendency of the contract.

विकल्प

• The contract is void since it restrains the lawful right of the company to engage in business

• The contract is void because there is no consideration being paid

• The contract is valid

• The contract is void since the competitor is not a party to the contract

Answer 1

The contract is void since it restrains the lawful right of the company to engage in business

Explanation:

As per the given principle option "The contract is void since it restrains the lawful right of the company to engage in business" is correct. According to the principle, the contract stands void as it is restricting the company in its lawful trade