Case Scenario:
Wright owned a small grocery store in West Philadelphia one block from City Avenue. At that point, the avenue is the western boundary of the city, separating it from Delaware County. All of Wright’s customers were drawn from the city and from an area no more than ten blocks distant from the store. There are two competing stores in the same area in Philadelphia. Wright sold the store (the building, stock, and other fixtures) and the good will to Hagerty for $950,000 and in the contract of sale covenanted never to compete with Hagerty in the grocery business anywhere in the City of Philadelphia.
Six months after the business was sold, Wright opened another grocery store less than one block from City Avenue in Delaware County. The new store was located almost due west from the store now owned by Hagerty, which made them about two blocks apart. Almost immediately, Wright began soliciting business from his old customers, and within four months, at least thirty per cent of his sales were being made to former customers drawn from Philadelphia.
Hagerty now seeks to have Wright enjoined from operating the store in Delaware County. Wright contends he should not be enjoined because the covenant is unenforceable and creates a monopoly. He further argues that even if the covenant is enforceable in all respects, he has not violated it. Is this noncompetition clause valid? Should Wright be enjoined from operating his new store?