Determining whether a matter or transaction involves business law, commercial law or both is not always easy.  Beginning when I was in law school and continuing throughout my practice as a lawyer, I have sought to expand my knowledge of both business law and commercial law in order to better represent the needs and interests of my business clients.  An example of matters that often involve issues that fall under both business law and commercial law are non-compete agreements.

Texas Non-Compete Agreements

One issue that many people may encounter during their career is non-compete agreements. A non-compete clause (also known as an NCC) is a term under which one party (often an employee) agrees not to enter into a similar profession in competition against another party (often the employer).

Non-compete agreements are a method for employers or business owners, to protect their business. Their ultimate goal is for their business to succeed, and the idea behind the non-compete clause is to prevent the business’s most skilled employees from leaving the company and using the company's confidential information and business contacts to start a competing business.

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Enforcing Non-Compete Agreements

As with some areas of law, employees sometimes find loopholes to these agreements, and the business may find that their non-compete clause is not enforceable. When an employer feels that a past employee has violated their non-compete agreement, they may want to ask the courthouse for a temporary injunction. But, before the employer will have any traction with this step, they must first analyze the enforceability of their non-compete clause.

According to North Texas Legal News, the Texas courts require two factors to enforce a non-compete agreement that is ancillary to an otherwise enforceable agreement. An employer can evaluate these factors for their clause by asking the following questions:

  • Did the employee receive adequate consideration for his/her promise not to compete? Texas is an at will employment state, which means that employment can be terminated at any time. An employer must promise something other than an offer of employment in exchange for their signature on the non-compete. This may include confidential information, stock options, financial incentives, trade secrets, or specialized training.
  • Are the limitations on time, geography, and scope imposed by the non-compete agreement reasonable? Non-compete clauses aren’t meant to restrain the employee any further than is necessary to protect the legitimate business interest of the employer. So, when an employer tries to enforce an agreement that prohibits all competitive activity or prohibits employment in any capacity for a competitive entity, the Texas courts will almost certainly refuse to enforce the agreement.

Non-compete agreements are just one part of commercial law, and they come with their own specific obstacles. Once a business grows to the point of considering factors such as non-compete clauses, an experienced lawyer can be a guide through issues that must be addressed.

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A local commercial law attorney

If you have the need for a commercial law attorney in the Austin area, I would welcome the opportunity to discuss your need for representation. Contact me to schedule a consultation.