Professional Documents
Culture Documents
Covenant
Approaches and Perspectives
Non-Compete Agreement
A Non-Compete Agreement seeks to protect the interests of the
agreements like
A valid non-compete clause can be ancillary to other types of
agreements such as
Pension Agreement
Independent contractor agreements
Change of control (CoC) agreements
Shareholder agreements
Settlement agreements
Lease agreements or
As part of the sale of a business
Profession or Trade
For example, in Pepsi Vs Coke case, the Delhi High Court
Under
Without Cause)
Outcome - May or May Not Be Enforceable
Others Non-Compete Agreement in the context of Constructive
Discharge
by the court that, the employer who fires an employee for failing to
which would be redundant post merger / acquisition and would ask the
executives occupying the position to leave voluntarily within a month
following a change in control. These executives would be provided with
necessary severance compensation and benefits as negotiated under
the single trigger contract.
Employee
For example, in the story of Rao Vs Rao, it was held by
the court that , Haris work performance was
satisfactory and that he was terminated by Mohan
because Mohan did not want him to exercise his
contractual right to obtain a 50% percent stake in the
corporation. In every contract, both parties act in
good faith. The implied promise of good faith modifies
Mohans discretionary right to dismiss Hari and then to
invoke the RC.
The absence of good faith may be construed as the
Standard of Reasonableness
Standard of Reasonableness will be scrutinized by the extent of
restraint including;
Non-compete Duration (Time or Temporal Dimension);
Territorial Scope (Geographical Dimension),
The nature of Business or Profession involved, including the
employees position and duties:
The effect of enforcement of non-compete agreement on the
discharged employee; and
The Public Interest in the employee being able to continue in
the field;
In a nutshell, The standard of reasonableness of Restrictive
Covenants could be determined by examining the three factors
1. Whether the restriction is greater than necessary to protect
the business and goodwill of the employer
2. Whether the employers need for protection outweighs the
economic hardship which the covenant imposes on the
departing party; and
3. Whether the restriction adversely affects the interests of the
public
Freedom of Contract
This
The
Factors
Cases have held that senior sales staff are included in this