Sunday, March 10, 2013

Covenants Not to Compete Must be Reasonable

Unreasonable covenants not to compete are not enforceable.

"Whether a covenant not to compete is an unreasonable restraint of trade is a question of law . . ..  Courts generally disfavor covenants not to compete ‘because of the public policy against restraints of trade and the hardships resulting from interference with a person's means of livelihood.’ Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 658 (Tex. App. – Dallas 1992, no writ).  A covenant not to compete is a restraint of trade and unenforceable as a matter of public policy unless it meets a reasonableness standard.  Covenants not to compete are unreasonable if they are broader than necessary to protect the legitimate interests of the employer."  M-I LLC v. Stelly, 733 F. Supp. 2d 759, 793 (S.D. Tex. 2010)(citations omitted).

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