Subs-n-Stuff Sandwich Company, a national sandwich shop chain, requires all of its employees from the delivery persons, sandwich makers on up to upper management to sign contracts that include the following clause: Employee covenants and agrees that, during his or her employment with the Employer and for a period of two (2) years after he or she will not have any direct or indirect interest in or perform services for any business which derives more than ten percent (10%) of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches and which is located with three (3) miles of either [the Subs-n-Stuff location in question] or any such other Subs-n-Stuff Sandwich Shop.Sammy, who lives in Texas, was hired by a Subs-n-Stuff shop as a sandwich maker and if needed, filled in as a delivery driver. He signed an agreement with the above provision included in the agreement. It has been six months and Sammy would like to work as a server at Denny's restaurant located one mile down the road. He believes it is no problem because while Denny's has an extensive sandwich menu, it is not a sandwich shop. Can Sammy go work for Denny's without any legal consequences?

1.The clause included in Sammy's agreement is

A. a covenant not to compete.

B. adhesion clause.

C. a settlement clause.

D. exculpatory clause

2.These types of agreements are(2 or more answers)

A. contracts in restraint of trade.

B. generally illegal in most states.

C. generally legal in most states when reasonable and ancillary.

found in employment contracts and in the sale of ongoing business contracts.

3. What more information would help with determining whether there are any possible legal consequences? Choose all answers that apply.

A. How much revenue Denny derives from its sandwich sales.

B. Whether the restrictions in time and area are reasonable.

C. Whether the clause must be ancillary part of the employment contract.

Whether this type of clause is legal in Texas.

4. If Texas law requires this agreement to be ancillary then (2 or more answers)

A. the promise of employment for exchange to not compete satisfies is enough consideration and meets this requirement.

B. promising to give employee confidential information in exchange for the promise to not compete is enough consideration and meets this requirement.

C. promising to give the employee special training in exchange for not competing is enough consideration and meets this requirement.

5. Since Denny's is not a sandwich shop,

A.Sammy will not have any legal consequence and can work for Denny's.

B.may still have have legal consequences if Denny's derives more than 10 percent of its revenue from sandwich sales.

6. Choose all answers that apply. Sammy's best legal arguments for NOT enforcing this agreement are

A.Denny's is not a sandwich shop.

B. The agreement was in writing.

C. Sammy received no specialized training or confidential information, this agreement is not ancillary.

D.The time and geographical area terms are unreasonable.