Top Seven Ways to Attack a Non-Compete Agreement

There are a number of ways that a non-compete agreement can be attacked. For employers, it is helpful to know how a non-compete agreement is vulnerable. For employees, it is helpful to know defenses to a non-compete agreement.

1. If a non-compete agreement is part of a broader contract between an employer and an employee, then one way the employee can attack the non-compete agreement is by claiming that the employer breached a different part of the contract before the employee breached the non-compete agreement. The Texas Supreme Court has ruled that when a party commits a material breach of a contract, the other party is excused from further performance. Therefore, if the employer committed a material breach of the contract, a good argument can be made that any subsequent breach of the non-compete agreement by the employee is irrelevant.
2. The Texas Supreme Court has ruled that an ambiguity in a contract will be construed against the party that drafted the contract. Therefore, if the employer drafted the non-compete agreement, any ambiguous terms in the non-compete agreement should be construed in favor of the employee. The employee could attack the non-compete agreement by pointing out that key terms in the non-compete agreement are not adequately defined.
3. If the employer did not give the employee confidential information, the employee could attack the non-compete agreement by contending that what the employee received in exchange for the non-compete agreement is inadequate under Texas law.
4. If the non-compete agreement does not contain a reasonable time limitation, the non-compete agreement can be attacked for violating Texas law.
5. If the non-compete agreement does not contain a reasonable geographic limitation, the non-compete agreement can be attacked for violating Texas law.
6. If the non-compete agreement does not contain a reasonable scope of activity limitation, the non-compete agreement can be attacked for violating Texas law.
7. If the non-compete agreement contains restraints that are greater than necessary to protect the employer’s business interests, the non-compete agreement can be attacked for violating Texas law.

In light of the various ways that non-compete agreements can be attacked, employers and employees should hire attorneys who are experienced in dealing with non-compete agreements.