Broken Promises: Enforcement of Covenant Not to Compete

A covenant not to compete is a contract provision that prohibits a person from entering into direct competition with a particular company or business. These provisions are common in employment contracts, and are also included in contracts for the sale of a business. However, not all covenants not to compete are enforceable. Missouri courts have found covenants not to compete to be unenforceable where the employee’s ability to work is restricted for too long or in too large of an area.

Furthermore, even if a covenant not to compete is enforceable, merely including it in a contract does not guarantee that it will be followed. As a result, there are several remedies available to an employer or business that is harmed by the breach of a covenant not to compete. The first option is an action to compel performance under the contract, or in other words, ask the court to issue an order requiring the former employee to cease all behavior that amounts to direct competition with the former employer. The second option is an action for money damages caused by the breach, for example, lost profits.

Where a former employee or former owner is not holding up his or her end of the bargain, companies must take action to protect their business interests. An attorney with experience in business litigation can assist companies in determining whether a valid claim may exist.