Void Agreements, Knocked-Out Terms, and Blue Pencils: Judicial and Legislative Handling of Unreasonable Terms in Noncompete Agreements

This article discusses the judicial and legislative handling of unreasonable terms in noncompete agreements. Section II provides a brief introduction to employer-employee noncompete agreement analysis and explores the preliminary issue of consideration. Section III analyzes the criteria and differing approaches courts use to determine the validity of a noncompete agreement, including the requirement of an employer’s legitimate business interest and the reasonableness of the occupational limitations as well as the geographic and temporal scope of the agreement. Section IV surveys the current judicial and statutory responses to unreasonable terms in a noncompete agreement.

Section V and VI critique the varying approaches and suggest a model statute to address unreasonable terms in noncompete agreements. This model takes into account a factor heretofore generally ignored by jurisdictions in their approach to unreasonable noncompete terms: The relationship between consideration and the reasonableness of the agreement.