Non-Compete Agreement in Order to Be Enforceable,

Non-Compete Agreement

In order to be enforceable, the non-compete agreement must contain a concept of offer, acceptance, legal consideration, capacity, legality of purpose, a reasonable amount of time and date, defined geographic area, and cannot prevent the use of the employee's professional skills.

"An offer is an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person, the offeree" (Offer and Acceptance). The expression of the offer can take many forms, such as a letter, email, fax, or even, conduct. The intention of the offer is judged in courts as how a reasonable person would view the situation. The terms of the contract must be clearly defined in the contract offer to ensure their understandability. If a reasonable person cannot understand the terms, it could be unenforceable in a court of law.

The acceptance of the offer is a final and unqualified expression of accent that must be communicated (Offer and Acceptance). It can only be accepted by the offeree, meaning it cannot be accepted by one person on the behalf of another. It may also be implied from the construction of the contract. If the offer specifies a certain method of acceptance, the offer must be accepted by that method, such as a fax or a post. Silence cannot be construed as an acceptance. The "mirror image rule" states the offer must be accepted exactly without modifications.

Legal consideration means the contract has to offer something of value in return for the promise of the other party (Contract Consideration). To be enforceable, the consideration must be adequate, meaning the mutual exchange must involve a fair price in comparison to the promise made. The principles of adequate consideration include; in addition to monetary sums, consideration can involve the promise to do, or not to do, something. Past consideration is never adequate. If the parties agree on the consideration, it is still binding, even if it is not totally equal to the promise. And, consideration is not adequate if it involves an illusionary promise or the item is worthless. Malicious means cannot be involved in the consideration.

Contractual capacity is the minimum mental capacity required by law for a party to enter into a contract and be bound by it (Capacity, Legality, Assent, and Form). This means that any person engaging in a contract must have enough mental capacity to understand the contract terms and understand being bound by them according to law. Persons who have no capacity include minors under 18 years of age, mentally impaired or incompetent persons, or intoxicated persons. Contracts with persons in a licensed profession that do not hold a license is unenforceable by law.

The legality of purpose means the contract cannot break any laws. The terms of the contract must be made under confinement of law. If malicious contention is deemed in any part of a contract, it can become unenforceable by law. The intentions of the contract must uphold all laws and regulations involved in the agreement.

Non-compete agreements are part of employment contracts usually with intention of protecting the employer against unfair competition, or theft of valuable employees that could harm the business by telling competitors how the employer does business or the concepts that entail how the business is performed. The courts have set rules for non-compete agreements through previous court decisions in cases. The agreement must have something of value in compensation for the agreement not to work for a competitor for a certain amount of time (How Restrictive Can Non-Compete Agreements Be?). Some states consider the offer of employment as something of value while other states require more, such as additional payment of money. The non-compete agreement must be for a reasonable amount of time and provide a date, usually two or three years from the date of termination. The agreement must contain a defined geographic location, usually the area that surrounds where the employer conducts business that is not too broad. The professional skills of the employees cannot be prevented from use. The employee must be allowed to use their skills in other capacities than the competition of the employer.

3. Common law is a tradition-based set of laws that are judge-made based on previous court decisions (Contracts and the Law). Common law governs contracts, such as employment, leases, and general business contracts. The Uniform Commercial Code (UCC) controls contracts for the sale of goods with a standardized collection of guidelines that govern the law of commercial transactions. Where non-compete agreements are part of employment contracts, they are governed under common law because they do not deal with actual commercial transactions.

4. The non-compete agreement with Fabulous Hotel appears to be completely legal and enforceable accept for defining something of value in return for the agreement. Something of value could be defined in another area of the contract that would make the agreement enforceable in a court of law. If the agreement had not defined "for another hotel," the agreement could be unenforceable. If it had stated the employee was not allowed to work for a competitor, it would not be defined in the contract because where competitors usually provide some kind of restaurant it would include all restaurants, which makes the aspects of the contract too broad and would prevent the employee from using their professional skills. But, where the competitor aspect was defined, it is legally enforceable.