non-compete clause - wikipedia, the free encyclopedia

11/21/2015 Non-compete clause - Wikipedia, the free encyclopedia

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Non-compete clauseFrom Wikipedia, the free encyclopedia

A non-compete clause (often NCC), or covenant not to compete (CNC), is a term used in contract lawunder which one party (usually an employee) agrees not to enter into or start a similar profession or tradein competition against another party (usually the employer). Some courts refer to these as "restrictivecovenants." As a contract provision, a CNC is bound by traditional contract requirements including theconsideration doctrine. The use of such clauses is premised on the possibility that upon their terminationor resignation, an employee might begin working for a competitor or starting a business, and gaincompetitive advantage by exploiting confidential information about their former employer's operationsor trade secrets, or sensitive information such as customer/client lists, business practices, upcomingproducts, and marketing plans.

However, an over-broad CNC may prevent an employee from working elsewhere at all. Englishcommon law originally held any such constraint to be unenforceable under the public policy doctrine.[1]Contemporary case law permits exceptions, but generally will only enforce CNCs to the extentnecessary to protect the employer. Most jurisdictions in which such contracts have been examined by thecourts have deemed CNCs to be legally binding so long as the clause contains reasonable limitations asto the geographical area and time period in which an employee of a company may not compete.[2]

The extent to which non-compete clauses are legally allowed varies per jurisdiction. Some jurisdictions,such as the state of California in the US, invalidate non-compete-clauses for all but equity stakeholdersin businesses.[3]

Contents

1 History

2 United States

2.1 California

2.1.1 Out of state agreements are not enforceable

2.1.2 Exceptions - valid non-compete agreements in California

2.2 Florida

2.3 Hawaii

2.4 Illinois

2.5 Massachusetts

2.5.1 Historical context

2.5.2 Current law

2.5.2.1 Reasonableness



2.5.2.1 Reasonableness

2.5.2.2 Consideration

2.6 Texas

2.7 Virginia

2.7.1 Legitimate business interest

2.7.2 Reasonable restriction on employee's ability to earn a living

2.7.3 Public policy

2.8 Washington

3 Canada

4 Europe

5 India

6 Related restrictive covenants

7 Cases

8 Notes

9 References

10 External links

HistoryAs far back as Dyer's Case in 1414, English common law had already been "old and settled" thatrestraints on trade were unenforceable.[1] That ban remained unchanged until 1621, when a restrictionthat was limited to a specific geographic location was found to be an enforceable exception to thepreviously absolute rule.[4] Almost a hundred years later, the exception became the rule with the 1711watershed case of Mitchel v. Reynolds[5] which established the modern framework for the analysis of theenforceability of non-compete agreements.[6]

United StatesThe majority of U.S. states recognize and enforce various forms of non-compete agreements. A fewstates, such as California, totally ban or prohibit non-compete agreements except in limitedcircumstances. For this reason, non-compete agreements have been popular among companies withemployees working in states where they are allowed. They are very common among commercial radiostations and television stations, especially for radio personalities and television personalities working for



media conglomerates. For example, if a radio or television personality quits, is laid off or fired from onestation in the market they work in, they cannot work for another competing station in the same marketuntil their contract expires with their former employing station.

California

Non-compete agreements are automatically void as a matter of law in California, except for a small setof specific situations expressly authorized by statute.[7] They were outlawed by the original CaliforniaCivil Code in 1872 (Civ. Code, former 1673).[8]

Out of state agreements are not enforceable

The preeminent court decision discussing the conflict between California law and the laws of otherstates is the 1998 decision Application Group, Inc. v. Hunter Group, Inc. [9] In Hunter, a Marylandcompany required that its Maryland based employee agree to a one-year non-compete agreement. Thecontract stated that it was governed by and to be construed according to Maryland law. A Marylandemployee then left to work for a competitor in California. When the new California employer sued inCalifornia state court to invalidate the covenant not to compete, the California court agreed and ruledthat the non-compete provision was invalid and not enforceable in California. Business and ProfessionsCode Section 16600 reflects a "strong public policy of the State of California" and the state has a stronginterest in applying its law and protecting its businesses so that they can hire the employees of theirchoosing. California law is thus applicable to non-California employees seeking employment inCalifornia.

Whether California courts are required by the Full Faith and Credit Clause of the United StatesConstitution to enforce equitable judgments from courts of other states, having personal jurisdiction overthe defendant, that enjoin competition or are contrary to important public interests in California is anissue that has not yet been decided.[10]

Exceptions - valid non-compete agreements in California

There are limited situations where a reasonable non-compete agreement may be valid in California.

1. Where the owner of a business is selling the entire business, or is selling the goodwill in thebusiness, the seller may be bound by a non-compete clause.[11]

2. When there is a dissolution or disassociation of a partnership.[12]

3. Where there is a dissolution of a limited liability company.[13]

Florida

The enforceability of non-compete agreements in the state of Florida is quite common. Some law firmsbuild their law practice around these agreements and represent employees, employers and potential newemployers of an employee currently bound by a non-compete agreement. The agreement is not allowedto be overly broad and generally difficult to enforce if it is for more than two years. [14] However,Florida courts will rarely refuse to enforce a non-compete agreement due to its length or geographicscope. Instead, under Florida law, courts are required to "blue pencil" an impermissibly broad or lengthynon-compete agreement to make it reasonable within the limits of Fla. Stat. 542.335.[15] Also if the



agreement is part of a general employment contract then there is the possibility of a prior breach by anemployer. This may cause the non-compete clause of the contract to become unenforceable. However,recent case law from Florida's appellate courts has eroded the utility of the prior breach defense. [16]

Hawaii

A new law bars high-tech companies in Hawaii from requiring their employees to enter into non-compete and non-solicit agreements as a condition of employment. The new law, Act 158, went intoeffect on July 1, 2015.[17]

Illinois

Noncompete agreements will be enforced in Illinois if the agreement is ancillary to a valid relationship(employment, sale of a business, etc.) and 1) must be no greater in scope than is required to protect alegitimate business interest of the employer, 2) must not impose an undue hardship on the employee, and3) cannot be injurious to the public.[18] While reasonable geographic and temporal limitations on thenoncompete agreement are not expressly required by governing law, they tend to be examined as ameasure of whether the scope of the noncompete is greater than is required to protect a legitimatebusiness interest of the employer.[19]

Unlike other jurisdictions, which follow the general rule that consideration is only important as towhether it exists and not as to whether it is adequate, Illinois will inquire into the adequacy ofconsideration.[20] The majority of courts will require at least two years of continued at-will employmentto support a noncompete agreement (or any other type of restrictive covenant). However, in certain casesinvolving particularly sharp conduct by an employee, courts have required less.

While Illinois courts state the rule above, logically the analytical steps should be in reverse order --because inadequate consideration is fatal to the claim. Thus, under McInnis v OAG [21] there are threerequirements in order for a post employment restrictive covenant limiting a former employees right towork for a competitor to be enforceable under Illinois law: (1) it must be ancillary to a valid contract; (2)it must be supported by adequate consideration; (3) it must be reasonable, considering whether it: (a) isno greater than is required for the protection of a legitimate business interest of the employer, (b) doesnot impose undue hardship on the employee, and c) is not injurious to the public. The McInnis decisioninterpreted the Fifield decision, above, to mandate two years' employment in order for consideration tobe adequate.

Massachusetts

Noncompete agreements will be enforced in Massachusetts in appropriate circumstances.[22]

Historical context

By 1837, Massachusetts had indisputably adopted the analysis established in Mitchel.[4] In 1922, theSupreme Judicial Court eliminated any doubt that restrictive covenants in the employment contextwould be enforced when reasonable.[23]

Current law



The basic proposition enunciated long ago continues to apply: A covenant not to compete isenforceable only if it is necessary to protect a legitimate business interest, reasonably limited in time andspace, and consonant with the public interest. [24]

Reasonableness

Reasonableness is the touchstone of the analysis and is highly fact-dependent.[25] The context in whichthe CNC arises (such as employment relationship, contractual relationship) is a critical factor in theanalysis.[26] A CNC that is unreasonable because it is too broad, will be scaled back if it is in factcapable of being narrowed.[27]

Even when a CNC is limited in duration, geographic reach, and scope, it will be enforced only to theextent . . . necessary to protect the legitimate business interests of the employer. [28] Recognizedlegitimate business interests are generally identified as the protection of trade secrets, confidentialinformation, and goodwill.[29]

Consideration

An otherwise valid CNC must still, like other contracts, be supported by consideration. Accordingly, theSupreme Judicial Court has held that a CNC must be ancillary . . . to an existing employment orcontract of employment or some other permissible transaction . . . . [30] However, consideration canexist regardless of whether the CNC is entered into at the beginning of the employment relationship,during the term of employment, or even at the end of an employment relationship.[31]

Texas

Under Texas law "a covenant not to compete is enforceable if it is ancillary to or part of an otherwiseenforceable agreement at the time the agreement is made to the extent that it contains limitations as totime, geographical area, and scope of activity to be restrained that are reasonable and do not impose agreater restraint than is necessary to protect the goodwill or other business interest of the promisee."[32]Specific rules apply to physicians, notably that a physician cannot be prohibited "from providingcontinuing care and treatment to a specific patient or patients during the course of an acute illness evenafter the contract or employment has been terminated."[33]

However, Texas courts will not enforce a covenant not to compete if the court determines that such acovenant "is against public policy and therefore substantively unconscionable."[34]

Virginia

In Virginia, the enforceability of covenants not to compete is governed by common law principles. Asrestrictions on trade, CNCs are not favored by Virginia courts, which will enforce only narrowly draftedCNCs that do not offend public policy.

In Virginia, a plaintiff must prove by a preponderance of the evidence that the covenant is reasonable inthe sense that it is: (1) no greater than necessary to protect its legitimate business interests, such as atrade secret; (2) not unduly harsh or oppressive in restricting the employee's ability to earn a living; and(3) not against public policy. Paramount Termite Control Co., Inc v. Rector, 380 S.E.2d 922, 924 (Va.1989).



Legitimate business interest

In Virginia, courts weigh the (1) function, (2) geographic scope and (3) duration of the CNC against theemployer's legitimate business interests to determine their reasonableness.[35] Additionally, CNCs areonly reasonable if they prevent the employee from entering into direct competition with the employerand must not encompass any activity in which the employer is not engaged.[36] Virginia courts will notgenerally attempt to revise or enforce a narrower restriction in a non-compete agreement. As a result, adrafting error or unenforceable restriction may render the entire agreement unenforceable in Virginia.[37]

Reasonable restriction on employee's ability to earn a living

Second, to enforce the CNC, a Plaintiff must show that it is not unduly harsh or oppressive in restrictingthe employee's ability to earn a living. In Virginia, a CNC is not unduly harsh or oppressive if balancingits function, geographic scope and duration the employee is not precluded from (1) working in a capacitynot in competition with the employer within the restricted area or (2) providing similar services outsidethe restricted area.[38]

Public policy

Third, to enforce a CNC, a Plaintiff must show the CNC is reasonable from the standpoint of a soundpublic policy. Virginia does not favor restrictions on employment and therefore CNCs are generally heldagainst public policy unless they are narrowly drafted as enumerated above. In Virginia, a CNC does notviolate public policy if the restrictions it imposes do not create a monopoly for the services offered bythe employer or create a shortage of the skills provided by the employee.[39]

Washington

According to Racine v. Bender, CNCs will be enforced by courts if they are validly formed andreasonable.[40] There are exceptions, like in Labriola v. Pollard Group, Inc., where the WashingtonSupreme Court invalidated a CNC not supported by independent consideration by strictly enforcing thepre-existing duty rule.[41]

CanadaCanadian courts will enforce non-competition and non-solicitation agreements, however, the agreementmust be limited in time frame, business scope, and geographic scope to what is reasonably required toprotect the company's proprietary rights, such as confidential marketing information or clientrelations[42] and the scope of the agreement must be unambiguously defined. The 2009 Supreme Courtof Canada case Shafron v. KRG Insurance Brokers (Western) Inc. held a non-compete agreement to beinvalid due to the term "Metropolitan City of Vancouver" not being legally defined.[43]

The 2000 Ontario Court of Appeals case Lyons v. Multary established a general preference towards non-solicitation over non-competition agreements, regarding the latter as "much more drastic weapons" andheld a non-competition agreement to be invalid when a non-solicitation agreement would have beensufficient to protect the company's interests.



EuropeGenerally, CNCs are allowable in Europe only if the employer can show a reasonable business interestin having a CNC.

In the Netherlands, non-compete clauses (non-concurrentiebeding or concurrentiebeding) areallowed regarding issues such as moving to a new employer and approaching customers of the oldcompany. Unreasonable clauses can be invalidated in court.[44]In the United Kingdom, CNCs are called Restraint of Trade clauses and may be used only if theemployer can prove a legitimate business interest to protect in entering the clause into the contract.Mere competition will not amount to a legitimate business interest.[45]In Germany, CNCs are allowed for a term up to two years. The employer must provide financialcompensation for the duration of the CNC amounting to at least half the gross salary.[46]Unreasonable clauses, for example excluding similar jobs in whole Germany, can be invalidated.In Belgium, CNCs are restricted to new employments within Belgium and for no more than oneyear. The employer must pay financial compensation for the duration of the CNC, amounting atleast half of the gross salary for the corresponding period.[47]In Spain, CNCs are regulated by article 21 of the labor law. CNCs are allowed up to two years fortechnical professions and six months for other professions.In France, CNCs must be limited in time to a maximum of two years and to a region where therethe employee's new work can reasonably be seen as competitive. The region can be a city or thewhole country, depending on the circumstances. The employer can be forced to pay financialcompensation, typically 30 percent of the last salary, depending on the circumstances surroundingthe termination of the employment. A CNC may not unreasonably limit the possibilities of theemployee to find a new employment.In Romania, CNCs are regulated by article 20-4 of the labor code and restricted to two years formanaging positions and six months for other positions. The employer must pay financialcompensation for the duration of the CNC, amounting to at least 25 percent of the last salary. ACIWorldwide has been known to block employees even after changing their job several times.In Portugal, CNCs are regulated by article 136 of the labor code and restricted to two yearsextendible to three years in cases of access to particularly sensitive information. The employermust pay financial compensation for the duration of the CNC but the law doesn't specify anythingregarding the amount of the compensation.[48]in Italy CNCs are regulated by articles 2125, 2596 and 1751 bis of the civil code.

India

Section 27 of Indian Contract Act has a general bar on any agreement that puts a restriction on trade.[49]On this basis, it would appear that all non-compete clauses in India are invalid. However, the SupremeCourt of India has clarified that some non-compete clauses may be in interest of trade and commerce,and such clauses are not barred by Section 27 of the Contract Act, and therefore valid in India.[50]Notably, only those clauses backed by a clear objective that is considered to be in advantage of trade andcommerce survives this test. For instance, a co-founder of a startup who signed a non-compete clausecan be held to it,[51] but if a junior software developer or a call center employee signs a non-competeclause with the employer the same may not be enforceable.[52]

Related restrictive covenants



While CNCs are one of the most common types of restrictive covenants, there are many others. Eachserves a specific purpose and provides specific rights and remedies. The most common types ofrestrictive covenants are as follows:

Garden-leave clause: a type of CNC by which an employee is compensated during the period thatthe employee is restricted.

Forfeiture-for-Competition Agreement and Compensation-for-Competition Agreement: anagreement by which an employee either forfeits certain benefits or pays some amount of money toengage in activities that are competitive with his former employer.

Forfeiture agreement: an agreement by which an employee forfeits benefits when his employmentterminates, regardless of whether he engages in competitive activities.

Nondisclosure/confidentiality agreement: an agreement by which a party agrees not to use ordisclose the other party's confidential information.

Nonsolicitation agreement: an agreement by which an employee agrees not to solicit - and, if welldrafted, not to accept - business from the employer's customers.

Antipiracy agreement: an agreement by which an employee agrees not to solicit - and, if welldrafted, not to hire - the employer's employees.

Invention assignment agreement: an agreement by which an employee assigns to the employer anypotential inventions conceived of during employment.

The enforceability of these agreements depends on the law of the particular state. As a general rule,however, with the exception of invention assignment agreements, they are subject to the same analysisas other CNCs.[53]

CasesIn 2005, Microsoft and Google litigated the enforceability of a non-compete clause in Kai-FuLee's employment contract with Microsoft. Difference in state laws were highlighted as Googleattempted to maneuver the case to California courts, where California law would be more likely tohold the clause unenforceable.[8]IBM v. Papermaster (No. 08-9078, 2008 U.S. Dist): Mark Papermaster moving from IBM toApple computer in 2008.[54]In April 2010, after a year of non-compete clause stipulated on the contract, Paul Teutul Jr.,formerly from Orange County Choppers, was able to start his own new non-motorcycle designcompany.[55]On 2 September 2013 Microsoft litigated the enforceability of a non-compete clause on Nokiapreventing it from producing any mobile devices under the Nokia name through 31 December2015.

Notes1. Alger, 36 Mass. at 52 (1837).2. Oblon, David. "Maryland Federal Court Voids Non-Compete Even After "Blue Penciling" It. (2012)".

http://www.albo-oblon.com/. Albo-Oblon L.L.P. Retrieved 7 July 2014.3. Cal. Bus. & Prof. Code 16600, 166014. Alger, 36 Mass. at 53 (1837).



5. Mitchel v. Reynolds, 24 Eng. Rep. 347 (Q.B. 1711)6. C. L. Fisk, Working Knowledge: Trade Secrets, Restrictive Covenants in Employment, and the Rise of

Corporate Intellectual Property, 1800-1920, 52 Hastings Law Journal no. 2, 453-54 (2001); see also Alger, 36Mass. at 53.

7. Cal. Bus. & Prof. Code 16600; see e.g. Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937(http://online.ceb.com/CalCases/C4/44C4t937.htm) (2008).

8. "Calif. Supreme Court finds noncompete clauses invalid". CNET. November 8, 2008. Retrieved 2008-11-09."Microsoft and Google battled over a noncompete clause in 2005, when Google hired Kai-Fu Lee, an expertin speech recognition technology, even though he had signed a noncompete agreement at Microsoft. Googleunsuccessfully worked to move the case from Washington to California, in hopes that the noncompete clausewould be ruled invalid. The case was eventually settled outside of court."

9. 61 Cal. App. 4th 881 (http://online.ceb.com/calcases/CA4/61CA4t881.htm) (1998).10. See EMC Corp. v. Donatelli, Suffolk Superior Court, Civil Action 09-1727-BLS2 (2009).11. Cal. Bus. & Prof. Code 16601.12. Cal. Bus. & Prof. Code 16602.13. Cal. Bus. & Prof. Code 16602.5.14. State of Florida. "542.335 - Valid Restraints of Trade". Online Sunshine. State of Florida. Retrieved 26 April

2015.15. Vanko, Kenneth. "A Quick State-By-State Guide on the Blue-Pencil Rule". Legal Developments In Non-

Competition Agreements. Kenneth Vanko. Retrieved 26 April 2015.16. Pollard, Jonathan. "Recent Florida Non-Compete Cases: A Decision from the 3rd DCA on Independent

Clauses". Jonathan Pollard LLC. Jonathan Pollard LLC. Retrieved 26 April 2015.17. Hawaii Bans Non-Compete and Non-Solicit Clauses in High-Tech Employment

(https://casetext.com/posts/hawaii-bans-non-compete-and-non-solicit-clauses-in-high-tech-employment)18. Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871 [1] (http://sherinianlaw.net/wp-

content/uploads/2014/11/Reliable-Fire1.pdf) (2011).19. Bires v. Waltom, Case No. 8-4680 [2] (http://sherinianlaw.net/wp-content/uploads/2014/11/1291.pdf) (2009).20. Fifield v. Premier Dealer Services, 993 N.E.2d 938, 942 (Ill. App. Ct. 1st Dist. 2013)[3]

(http://sherinianlaw.net/wp-content/uploads/2014/11/1120327.pdf) (2013).21. McInnis v OAG [4] (http://www.illinoiscourts.gov/Opinions/AppellateCourt/2015/1stDistrict/1142644.pdf)

2015 IL App (1st) 130097 (June 25, 2015)22. See e.g., Novelty Bias Binding Co. v. Shevrin, 342 Mass. 714

(http://masscases.com/cases/sjc/342/342mass714.html), 716 (1961); Marine Contractors Co., Inc. v. Hurley,365 Mass. 280 (http://masscases.com/cases/sjc/365/365mass280.html), 287 (1974); Edwards v. AthenaCapital Advisors, Inc., C.A. No. 07-2418-E, 2007 Mass. Super. LEXIS 378, 4-5 (Super. Ct. Aug. 7, 2007).See also Noncompete Agreements That Don't Mean What They Say(http://www.masshightech.com/stories/2008/09/01/focus4-Noncompete-agreements-that-dont-mean-what-they-say.html); Negotiating, Drafting and Enforcing Noncompetition Agreements & Related RestrictiveCovenants (Book) (http://www.mcle.org/books-cds/books-catalog.cfm?product_code=2090597B03).

23. See Sherman v. Pfefferkorn, 241 Mass. 468 (http://masscases.com/cases/sjc/241/241mass468.html) (1922).24. Lunt v. Campbell, No. 07-3845-BLS, *5 (Super. Ct Sept. 2007), quoting Boulanger v. Dunkin' Donuts Inc.,

442 Mass. 635 (http://masscases.com/cases/sjc/442/442mass635.html), 639 (2004), citing Marine Contrs. Co.v. Hurley, 365 Mass. 280 (http://masscases.com/cases/sjc/365/365mass280.html), 287-88, 289 (1974) and AllStainless, Inc. v. Colby, 364 Mass. 773 (http://masscases.com/cases/sjc/364/364mass773.html), 778 (1974).

25. Edwards v. Athena Capital Advisors, Civil Action No. 07-2418-E (Super. Ct. Aug. 7, 2007) (Covenants notto compete are valid if they are reasonable in view of all the facts in a particular case.), citing MarineContractors. Co. v. Hurley, 365 Mass. 280 (http://masscases.com/cases/sjc/365/365mass280.html), 287-288(1974); All Stainless, Inc. v. Colby, 364 Mass. 773 (http://masscases.com/cases/sjc/364/364mass773.html),778 (1974).

26. Sentry Ins. v. Firnstein, 14 Mass. App. Ct. 706 (http://masscases.com/cases/app/14/14massappct706.html),707 (1982) (quoting Restatement (Second) of Contracts 188 comment g (1981)); Zabota CommunityCenter, Inc. v. Frolova, No. 061909BLS1, *2 (May 18, 2006).

27. See Edwards v. Athena Capital Advisors, Inc., C.A. No. 07-2418-E, 2007 Mass. Super. LEXIS 378 (Super.Ct., Aug. 7, 2007), quoting All Stainless, Inc. v. Colby, 364 Mass. 773(http://masscases.com/cases/sjc/364/364mass773.html), 778 (1974).



28. EMC Corp. v. Gresham, No. 01-2084-BLS (Super. Ct. Nov. 2001), citing Novelty Bias Binding Co. v.Shevrin, 342 Mass. 714 (http://masscases.com/cases/sjc/342/342mass714.html), 716 (1961); MarineContractors Co., Inc. v. Hurley, 365 Mass. 280 (http://masscases.com/cases/sjc/365/365mass280.html), 287(1974).

29. Marine Contractors Co., Inc. v. Hurley, 365 Mass. 280(http://masscases.com/cases/sjc/365/365mass280.html), 287 (1974), citing All Stainless, Inc. v. Colby, 364Mass. 773 (http://masscases.com/cases/sjc/364/364mass773.html), 779-80 (1974); Sentry Insurance v.Firnstein, 14 Mass. App. Ct. 706 (http://masscases.com/cases/app/14/14massappct706.html), 708 (1982);Lunt v. Campbell, No. 07-3845-BLS, *5 (Super. Ct. Sept. 2007), citing Boulanger v. Dunkin' Donuts Inc.,442 Mass. 635 (http://masscases.com/cases/sjc/442/442mass635.html), 641 (2004); EMC Corp. v. Gresham,No. 01-2084-BLS (Super. Ct. Nov. 2001), citing Kroeger v. Stop & Shop Co. Inc., 13 Mass. App. Ct. 310(http://masscases.com/cases/app/13/13massappct310.html), 316 (1982).

30. Novelty Bias Binding Co., v. Shevrin, 342 Mass. 714 (http://masscases.com/cases/sjc/342/342mass714.html),716-17 (1961).

31. See Marine Contractors Co., Inc. v. Hurley, 365 Mass. 280(http://masscases.com/cases/sjc/365/365mass280.html), 288 (1974) (Marine's interest in protecting itsaccrued good will from possible incursions by Hurley is not weakened by the fact that it negotiated theagreement not to compete at the end of Hurley's employment rather than at some earlier time.); Novelty BiasBinding Co., v. Shevrin, 342 Mass. 714 (http://masscases.com/cases/sjc/342/342mass714.html) (1961);Richmond Bros. Inc. v. Westinghouse Bdcst. Co. Inc., 357 Mass. 106(http://masscases.com/cases/sjc/357/357mass106.html) (1970). But see Zabota Community Center, Inc. v.Frolova, No. 061909BLS1, *2 n.3 (Super. Ct. May 2006) (Although the plaintiff cited its mid-employmentthreat of termination as proof of consideration for the CNC, the court exercising its equitable powers, sees itrather differently.).

32. Texas Business and Commerce Code, Section 15.50a.33. Texas Business and Commerce Code, Section 15.50b.34. Sec. Serv. Fed. Credit Union v. Sanders, 264 S.W.3d 292, 297 (Tex. App.San Antonio 2008, orig.

proceeding)35. See Advanced Marine Enters., Inc. v. PRC Inc., 501 S.E.2d 148, 155 (Va. 1998); Simmons v. Miller, 544

S.E.2d 666, 678 (Va. 2001) (stating that the function, geographic scope and duration of the CNC must beconsidered together to determine the reasonableness of the restriction).

36. See e.g. Omniplex World Servs. Corp. v. US Investigations Servs., Inc., 618 S.E.2d 340, 342 (Va. 2005)(covenants not to compete have only been upheld when employees are prohibited from competing directlywith the former employer or through employment with a direct competitor.); see also Motion Control Sys. v.East, 546 S.E.2d 424 (Va. 2001).

37. Non-Competition Law Trends in Virginia (http://www.vaemploymentlawyers.com/2015/06/non-competition-law-trends-in-virginia.html), Virginia Employment Lawyers Blog, June 5, 2015

38. See Paramount, 380 S.E.2d at 925.39. See Blue Ridge Anesthesia & Critical Care, Inc. v. Gidick, 389 S.E.2d 467, 470 (Va. 1990); Paramount, 380

S.E.2d at 925.40. Racine v. Bender, 141 Wash. 606, 615, 252 P. 115 (1927)41. Ayres, I., and Speidel, R.E. Studies in Contract Law, Seventh Edition. Foundation Press, New York, NY:

2008, p. 8142. http://www.cba.org/abc/nouvelles/pdf/ADD-enforceability.pdf43. http://www.canadianlawyermag.com/Ambiguity-makes-non-compete-clause-invalid-SCC.html44. Gebonden aan concurrentiebeding? (http://www.intermediair.nl/artikel.jsp?id=69683) Intermediair (2004)45. [5]

(http://web.archive.org/web/20120303191054/http://www.lawdit.co.uk/reading_room/room/view_article.asp?name=../articles/Restraint%20of%20Trade.htm)

46. German law, 74 HBS, abs. 2 (http://dejure.org/gesetze/HGB/74.html)47. Clause de non-concurrence conditions de validit (http://www.droitbelge.be/fiches_detail.asp?

idcat=25&id=208). DroitBelge.net.48. Portuguese labour code, Article 136 (http://www.cite.gov.pt/pt/legis/CodTrab_L1_004.html#L004S9)49. [6]

(http://www.vakilno1.com/bareacts/indiancontractact/indiancontractact.html#27_Agreement_in_restraint_of_trade_void)



50. Non-compete clauses in Employment Agreements: Are they enforceable in India?, iPleaders.in, 29 May 2014,retrieved 31 October 2014

51. CO-FOUNDERS AGREEMENT: Things you should look out for while entering into a co-foundersagreement, iPleaders.in, 9 June 2014, retrieved 31 October 2014

52. Is a non compete contract valid in India? If yes, to what level?, quora.com, 18 August 2012, retrieved31 October 2014

53. For more detailed information, see Beyond the noncompete(http://www.computerworld.com/s/article/9133835/Beyond_the_noncompete?taxonomyId=10&pageNumber=1)

54. "Apple Exec Hired From IBM Ordered to Stop Work". PC World. November 8, 2008. Retrieved 2008-11-09."In June 2006, Papermaster signed a non-compete agreement in which he agreed not to work for an IBMcompetitor for at least a year if he ever left IBM, according to court documents. He informed IBM of theApple job offer last month. On October 20, IBM offered him a pay raise as well as the option to accept oneyear's salary if he promised not to go to a competitor, but Papermaster submitted his resignation the next day.On October 22, IBM filed suit."

55. "Paul Teutul Jr Designs, A New Orange county Chopper versus Paul Teutul Sr?". TrendyPress. August 13,2010. Retrieved 2011-02-07.

ReferencesAlger v. Thacher, 36 Mass. 51, 52 (1837).

California Business and Professions Code (http://caselaw.lp.findlaw.com/cacodes/bpc/16600-16607.html)

External links50 State Survey of Employee Noncompete Law (http://www.beckreedriden.com/wp-content/uploads/2010/12/Noncompetes-50-State-Survey-Chart-12-12-2010.pdf)

Retrieved from "https://en.wikipedia.org/w/index.php?title=Non-compete_clause&oldid=674771979"

Categories: Contract law Labour law Contract clauses

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