Best Products, Inc, hires Cole to develop and implement an e-commerce strategy for marketing Best's products. Cole signs a contract that in-cludes a clause prohibiting him from competing with Best during and af-ter the employment. Before the strategy is

Question

implemented, Cole resigns from Best's employ and opens a business to compete with Best. In Best's suit against Cole, what is the most important factor the court should consider in determining whether Cole should be allowed to compete with Best?

Answer 1

In determining whether Cole may compete with Best, the court should consider, most importantly, whether the covenant not to compete is necessary to protect Best's legitimate business interests. A covenant not to compete can violate the public policy to promote competi-tion in the economy. If it does, it would be an unreasonable restraint of trade. To be enforceable, a covenant not to compete should be ancillary to an oth-erwise enforceable contract, which, in this question, is the employ-ment contract. The restriction in a covenant not to compete should be reasonable in terms of duration and geographic area. The covenant should not unreasonably burden the party who is prohibited from com-peting. If the restrictions are unreasonable, a court can void or reform the cove-nant. Whether a party resigns under an employment contract does not affect the enforce-ability of a covenant not to compete.