Breach of Non-Competition Agreements

Non-competition agreements or clauses prevent an individual or entity from competing with another party within a defined geographic boundary for a particular amount of time. These agreements are often executed by former employees or former directors, officers and/or shareholders of a company and are meant to protect the company or employer from departing parties taking with them privileged information or clientele. 

There are strict legal principles that such contracts must adhere to in order to be enforceable in law. Although the determination of enforceability depends on a case-specific analysis, it can generally be said that such contracts must be reasonable and not contrary to the public interest. 

In the employment context, courts approach determining the enforceability of non-competition agreements by considering three key factors: 

1. whether the employer has a proprietary interest entitled to protection;
   
2. whether the temporal or spatial features of the non-solicitation clause or contract are too broad; and
   
3. whether the clause or contract is against competition generally rather than limited to non-solicitation of the employer’s customers.

In short, non-competition clauses cannot go beyond what is necessary to protect the legitimate business of an employer or company. 

A breach of a non-competition agreement or clause can result in significant damages suffered by the company or employer (both monetary and to reputation) which have several legal remedies available to them in such cases including an action and an injunction.

On the other hand, departing individuals who are purportedly bound by such agreements or clauses will require strong representation in arguing that the contract is unenforceable, thereby allowing the party to continue its business endeavors without obstruction.