Meaning
Judicial benchmark used to verify if a contractual limitation on future trade is reasonable and binding. Restrictive covenant enforceability depends on whether the clause is narrow enough to protect a legitimate interest without unfairly preventing a person from earning a living. Courts will strike down agreements that are too broad or last too long.
Judicial Review
Thorough examination of the specific wording of the contract occurs during a legal challenge. If restrictive covenant enforceability is found to be lacking, the entire clause may be voided by a judge. This outcome leaves the employer with no protection against competition from the former staff member.
Spatial Limitation
Spatial boundaries must be directly related to the actual territory where the employee operated. To maintain restrictive covenant enforceability, the employer must prove that a smaller radius would be insufficient to protect their trade. A worldwide ban is rarely acceptable for a local sales role.
Evidence of the density of the client base in the restricted area supports the claim for a specific distance. Calculations of the time needed for a successor to establish themselves help justify the duration of the ban.
Standardized Compliance
Standardized language that has already been tested in previous cases increases the likelihood of a successful defense. Maintaining restrictive covenant enforceability requires regular updates to employment contracts as case law evolves.
