To Be Valid An Agreement Not To Compete Must Be Ancillary To

October 11, 2021

The scope of the activities that a non-competition clause prohibits a worker from must also be proportionate. The scope of a non-competition clause cannot be broad enough to effectively limit all work within the restricted area. As a general rule, the scope of Texas law cannot be greater than what is necessary to protect the employer`s interests and/or confidential information protected by the agreement. Ultimately, the scope of each non-competition clause is analysed on a case-by-case basis and depends on the size of your employer, the sector and the specific tasks of the worker. A binding agreement requires more than an employer`s agreement to pay an employee. In Texas, the law requires more than job retention — one more “factor.” Generally speaking, the Texas employer must give a value that goes beyond mere employment for the non-compete clause to be applicable. Id. In Sheshunoff, the essential terms of the agreement were that the employer had promised to grant the worker access to confidential information, and the worker promised not to disclose such information. The promise to provide confidential information was illusory, as the worker can be terminated at any time, thus removing the employer`s obligation to provide the confidential information. See Sheshunoff, 209 S.W.3d at 649-650. However, the employer gave the worker access to confidential information throughout his employment. The Texas Supreme Court held that the duty not to compete should only be “incidental or part of the agreement” at the time the contract was entered into and that the requirement of an “otherwise enforceable agreement” could be satisfied by the subsequent fulfillment of the employer`s initially illusory promise to provide confidential information to an employee. Id.

at 655. Due to the actual existence of contractual terms that later became enforceable, it was somewhat understandable that the court ruled on tex. BUS. & COM. CODE § 15.50 (a) “does not justify the applicability of an agreement not to compete with excessively technical disputes that appear to have highlighted the question of whether a contract is ancillary to an otherwise enforceable agreement”. Fielding, 289 S.W.3d to 858 (pike, favorable). Reading the “at the time of agreement” of the law is a stretch, but not clearly wrong. Stand-alone agreements not to participate in competitions do not apply to Texas; they must “be subject to an enforceable agreement or be part of an enforceable agreement at the time of conclusion of the agreement”. In order for the Confederation to be “incidental”, in the light, the employee, after having consented, took an obligation not to compete with her employer. .

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