Smith ran a software-design business. He needed someone to handle some of the product demonstrations, so he hired Janet to do this work. In the employment contract, he insisted that Janet promise that if she left the firm, she would not work for Smith's competitors within a stated period of time and within a stated geographical region. If Janet now wishes to leave the job, indicate the statement that accurately describes the likely effect of her promise.
A) Such promises are in restraint of trade and thus the courts invariably hold them to be invalid.
B) If the court holds such a promise to be invalid, then the whole employment contract is necessarily void as well.
C) Such promises are valid only if given under seal.
D) If the court thinks that such a promise is reasonable between the employer and employee and that the public interest will not be damaged, then it will enforce it.
E) Such promises are invariably held to be valid when they are part of the terms of employment and thus are given in consideration for getting the job.

Question

Quizplus · Accepted Answer

Such promises are known as non-competition clauses, and their enforceability depends on whether they go beyond what is reasonably required to protect the employer's legitimate interests. The court will consider the geographic and time restrictions to ensure they are not overly broad and do not impose undue hardship on the employee's ability to earn a living. If the court finds the promise to be reasonable and necessary to protect the employer's business interests without unduly harming the public interest, then it will enforce it.

Smith Ran a Software-Design Business