Non Compete Clause
What is a Non Compete Clause?
A non compete clause is a clause in a contract. These clauses aim to prevent a person from carrying out competing activities against another business. A contract may refer to
Non-compete clauses should be enforced when the business (usually an employer or new business purchaser):
Ultimately, the question of when a non-compete should be enforced is about weighing up the cost of enforcement with the harm caused to the business.
If a non-compete clause is not enforceable then there’s no point spending money to try and enforce it. Courts will only uphold a restraint clause that is both:
The first step should be to get advice from an employment lawyer experienced in non-compete clauses.
It is not enough to assume that a clause has or might be breached. There must be evidence that the clause has not been complied with. This may take the form of:
The need to show that some loss has been suffered is only relevant if the restraint is being enforced to recover money. Loss does not necessarily need to be proven if the business is instead seeking an injunction.
An injunction is a Court order that prevents the person from continuing to breach the non-compete.
Lawyers don’t often talk about how much money it costs to enforce a non-compete clause. The bottom line is that it is expensive.
The cost is even higher if a business is seeking both damages and injunction.
Potential legal costs need to be weighed up against the value of the harm to the business. Sometimes this harm is easy to calculate and sometimes it is the prospect of harm that should be the focus.
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A non compete clause is a clause in a contract. These clauses aim to prevent a person from carrying out competing activities against another business. A contract may refer to
A non compete clause aims to restrict employees from competing against their employer during or after their employment. Employers use non-compete clauses to protect their business interests. The clauses can