Requirements Of An Enforceable Noncompetition Agreement In Texas

We are blogging on “Non-competes, Trade Secrets, Fiduciary Duties, and the Inevitable Disclosure Doctrine.” Mark Oberti has prepared a detailed paper on all of these issues, which can be found here.

A noncompetition covenant’s enforceability is ultimately a question of law for the court. Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642, 644 (Tex. 1994). To be enforceable, a noncompetition covenant must: (1) be ancillary to an otherwise enforceable agreement at the time that the agreement is made; and (2) contain limitations of time, geographic area, and scope of activity that are reasonable and that do not impose greater restraint than necessary to protect the company’s goodwill or other business interests. TEX. BUS. & COM. CODE ANN. § 15.50 (Vernon 2002). The Court must find only one non-illusory promise to support a noncompetition agreement. Ireland v. Franklin, 950 S.W.2d 155, 158 (Tex. App.–San Antonio 1997, no pet.). Both of these two requirements are discussed in the next series of posts.

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