An agreement to refrain from a particular trade profession or business is enforceable if certain criteria are met. This type of agreement, commonly known as a non-compete agreement, is often used by employers to protect their business interests from employees who may leave and start a competing business or work for a direct competitor. However, these agreements must be reasonable in scope and duration to be upheld in court.
To begin with, the agreement must be supported by valid consideration. In other words, the employee must receive some form of compensation or benefit in exchange for signing the non-compete agreement. This compensation could be in the form of a signing bonus, a promotion, or continued employment, for example.
Secondly, the restriction must be reasonable in scope. The agreement cannot prevent the employee from pursuing any and all forms of employment, but rather must be limited to a specific trade, profession, or business. For example, a non-compete agreement for a hairstylist may restrict the employee from working for a direct competitor within a certain geographic area, but cannot prevent them from pursuing a career in makeup artistry.
The restriction must also be reasonable in duration. The length of time that the employee is prohibited from working in a certain field must be reasonable and not excessive. Courts will consider factors such as the nature of the industry and the employee’s level of skill and expertise when determining what is a reasonable duration.
Finally, the agreement must protect a legitimate business interest. This could include protecting trade secrets, confidential information, or customer relationships. If the restriction is overly broad and does not serve to protect a legitimate business interest, it will likely be deemed unenforceable.
In summary, an agreement to refrain from a particular trade profession or business is enforceable if it is supported by valid consideration, reasonable in scope and duration, and protects a legitimate business interest. Employers must be mindful of these criteria when drafting non-compete agreements to ensure that they are enforceable should the need arise.
