Term Paper: Economics Government Regulations

Pages: 5 (1483 words)  ·  Bibliography Sources: 0  ·  Level: Master's  ·  Topic: Economics  ·  Buy This Paper


[. . .] The "perfect market" that is fully self-regulating relies on perfect information and no externalities, two assumptions that do not hold in the real world. Moreover, the process of self-regulation takes time, and will never really be achieved -- equilibrium only exists in economics textbooks. In the real world, markets trend towards equilibrium, but as circumstances change they can never fully achieve it. The degree of regulation that is optimal depends on the will of the society, which must decide when choosing its elective representatives where it wants to balance itself on the regulation continuum -- to provide greater protections and perhaps slower growth or to accept a more free market approach, which is inherently volatile. A society needs to choose for itself what its risk tolerance is -- and ideally would be able to elect representatives who can push for that view.

3. There are a number of elements of a contract -- consideration, legality, offer and acceptance. In this case, all four elements are present so the contract itself is legal. There is consideration -- the job. There is an offer and an acceptance. There is an intent to creat legal relations as well. There were no issues of competency involved in the contract. However, if specific elements of the contract do not meet the standard that the purpose of the contract must be lawful, then those elements would not be enforceable. Specifically, there is a question as to whether all components of this contract meet the standard of being legal consideration.

Thus, the issue here is with the non-compete clause. These types of clauses vary from state to state, which makes it difficult to pass specific judgment here. However, courts will evaluate such clauses on the basis of reasonableness. The clause does state a job, a radius and a length of time, which are normally parts of these agreements. However, such agreements are generally only enforceable when there is a legitimate business reason for doing so. The departure of a chef, for example, is not going to be accepted. The hotel will be able to find another chef without much trouble. Further, the reputation of its restaurant is not necessarily dependent on the individual chef at the helm. Also, chefs change jobs all the time, so it is unreasonable to enforce a standard such as this in the industry, because it is not normal industry behavior.

From a business perspective, the hotel's chef moving to another restaurant does not constitute unfair competition. Even if that chef took all of the recipes with him, the restaurant industry is highly diffuse, and no one company has significant market share. If that chef moves to another restaurant, it is not likely to have the slightest effect on the hotel. Thus, no court would allow the clause to stand on that basis, because it needless impacts on the freedom of the market. The hotel would need to provide the court with a compelling reason to restrict competition in the market. This clause does not actually restrict competition anyway, and the hotel would never be able to prove that such restrictions were necessary.

Further, non-compete clauses are frequently rejected if they prevent the employee from gainful employment. Being a chef is a career, so the inability to work as a chef is definitely an impediment to gainful employment. Under the doctrine of at will employment, the employment agreement is between two parties and they can end it at any time. Once that employment has ended, it is unusual for any further restriction on the employee to be held, because such action would be punitive against the employee, holding him or her in servitude to a company against the spirit of at will employment. On these grounds again, the non-compete clause would not be upheld.

The contract is valid, including the clause, if only because it meets all of the criteria set out for a valid contract. A non-compete clause is legal, so it can be considered a valid part of the contract. The likelihood of gaining enforcement of this clause in this situation is, however, zero. The hotel's lawyers would be ripping off the hotel if they even took this to court. The cost of enforcement is not even close to being worth the cost of litigating the case in court. Therefore, while the clause is legal, it is unenforceable, and I as the chef would not worry about it in the… [END OF PREVIEW]

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Economics Government Regulations.  (2013, April 25).  Retrieved June 20, 2019, from https://www.essaytown.com/subjects/paper/economics-government-regulations/3387965

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"Economics Government Regulations."  25 April 2013.  Web.  20 June 2019. <https://www.essaytown.com/subjects/paper/economics-government-regulations/3387965>.

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"Economics Government Regulations."  Essaytown.com.  April 25, 2013.  Accessed June 20, 2019.