Weniger\'s employment contract contained the following provision: \"Weniger here

Question

Weniger's employment contract contained the following provision: "Weniger hereby agrees that thoughout the two-year period commencing on the termination of his employment hereunder for whatever reason he will not, directly or indirectly, be or become engaged or financially interested in, or an officer or director employee, consultant or advisor of or to, any business, firm or corporation which is engaged anywhere in the United States or Canada in any business which competes in any way with Egnall," Is the provision enforceable? Why or why not?

Explanation / Answer

The above provision comes under restrictive covenant under the employment contract. the restricitve covenant is valid and enforceable and used in order to prevent unfair competition. However it should have genuine reasons to show that such act of the employee is unfair and within a certain geographic limtation that is clearly defined.

In the above case this restrictive covenant is enforceable when there are reasonable time limit, specified geographic location.

But since the time limit for employment and the geographic location is very broad this is considered unreasonable becauseb Weigner cannot enter into employment with any one in US or canada that have competed with the Egnall . Weigner cannot be unemployed for such aa long period and across such large area. Therefor the restrictive covenant is considered to be unreasonable restraint of trade and void according to law.

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