Baby Products, Inc., hires Cole to develop and implement an e-commerce strategy for marketing Baby's products. Cole signs a contract that includes a clause prohibiting him from competing with Baby during and after the employment. Before the strategy is implemented, Cole resigns from Baby's employ and opens a business to compete with Baby. In Baby's suit against Cole, to determine whether Cole may compete with Baby, what is the most important factor the court should consider?
What will be an ideal response?
In determining whether Cole may compete with Baby, the court should consider, most importantly, whether the covenant not to compete is necessary to protect Baby's legitimate business interests. A covenant not to compete can violate the public policy to promote competition in the economy. If so, it would be an unreasonable restraint of trade. To be enforceable, a covenant not to compete should be ancillary to an otherwise enforceable contract, which, in this question, is the employment contract. A covenant not to compete should contain reasonable restrictions in terms of duration and geographic area. The covenant should not unreasonably burden the party who is prohibited from competing. If the restrictions are unreasonable, a court can void the covenant. Whether a party resigns under an employment contract does not affect the enforceability of a covenant not to compete.
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a. True b. False Indicate whether the statement is true or false