Void Agreements, Knocked-Out Terms, and Blue Pencils: Judicial and Legislative Handling of Unreasonable Terms in Noncompete Agreements

37 Pages Posted: 23 Nov 2011  

Kenneth Swift

University of Houston Law Center

Date Written: January 1, 2007

Abstract

This article discusses the judicial and legislative handling of unreasonable terms in noncompete agreements. Section II provides a brief introduction to employer-employee noncompete agreement analysis and explores the preliminary issue of consideration. Section III analyzes the criteria and differing approaches courts use to determine the validity of a noncompete agreement, including the requirement of an employer’s legitimate business interest and the reasonableness of the occupational limitations as well as the geographic and temporal scope of the agreement. Section IV surveys the current judicial and statutory responses to unreasonable terms in a noncompete agreement. Section V and VI critique the varying approaches and suggest a model statute to address unreasonable terms in noncompete agreements. This model takes into account a factor heretofore generally ignored by jurisdictions in their approach to unreasonable noncompete terms: The relationship between consideration and the reasonableness of the agreement.

Keywords: Noncompete agreement, unreasonable, contract, employment, employee, employer, business, jurisdiction, trade secrets, temporal limitation, geographic limitation

Suggested Citation

Swift, Kenneth, Void Agreements, Knocked-Out Terms, and Blue Pencils: Judicial and Legislative Handling of Unreasonable Terms in Noncompete Agreements (January 1, 2007). Hofstra Labor and Employment Law Journal, Vol. 24, p. 223, 2007. Available at SSRN: https://ssrn.com/abstract=1961781

Kenneth Swift (Contact Author)

University of Houston Law Center ( email )

4604 Calhoun Road
Houston, TX 77204-6060
United States

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