restrictive covenant

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We’ve written a lot about legal issues relating to contract formation and some general contract terms (for instance, here, here, and here). A common kind of contract we have yet to discuss is the non-competition agreement. More generally belonging to a class of agreement known as “restrictive covenants,” which also include non-solicitation agreements, a non-compete agreement purports to restrict an employee of a business from competing against his employer during the employment or for some time once the employment ends.  Every business should understand that these kinds of agreements must adhere to certain limitations for a judge to consider enforcing them.  These limitations, which we review below, are required because the law permits a business only to restrict competition to the extent necessary to protect its legitimate business interests in a reasonable manner.

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