From: Myah Rossi [myah.rossi@bruins.belmont.edu]
Sent: September 25, 2022
To: Jane Partner [jane.partner@belmont.com]
Subject: New Client – Maria Martin – CM#2022-5678 – North Carolina
Jane:
You asked me to find whether or not Ms. Martin will be able to enforce the covenant not to
compete with Mr. Adams when the covenant states that he will not during the time of his
employment and for a period of three years thereafter, engage in the same kind or similar
business as that engaged in by the employer in any place in the State of North Carolina (either
directly or indirectly) for himself or as agent, representative, or employee of others.
I have concluded my answer will most likely be no. North Carolina law, under statute § 75-1
requires that covenant not to compete refrain from restricting trade and/or commerce. “Every
contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or
commerce in the State of North Carolina is hereby declared to be illegal.” See N.C. Gen. Stat. §
75-1. The state courts have elevated upon this by stating that the covenant must be: (1) in
writing; (2) reasonable as to time and territory; (3) a part of the employment contract; (4) based
on valuable consideration; and (5) designed to protect a legitimate business interest. See Hartman
v. Odell and Assoc., Inc., 450 S.E.2d 912, 916 (N.C. Ct. App. 1994). In the case at hand,
although the covenant is based on valuable consideration, in writing, and a part of an
employment contract, but it is not reasonable regarding territory, time, and does not appear to
protect a legitimate business interest. Therefore, a court will be most likely to find that the
covenant restricts trade, which is illegal, as stated above, under statue § 75-1 and thus nonenforceable.
First, when it comes to territory, The Agreement reaches not only clients, but potential clients,
and extends to areas where Plaintiff had no connections or personal knowledge of customers, the
Agreement is unreasonable. With the covenant indicting the whole state of North Carolina, and
based on the similar cases court holdings, the territory would be considered too broad and
therefore, the court would view the covenant as invalid and unenforceable.
Next, in the cases that were given, it was known that if the territory was too broad, the time
would be considered too broad as well. Thus, the time would be considered not reasonable.
Finally, Adams had previously (unsuccessfully) tried to contact many of these clients on behalf
of Faster Pasta. With the two companies being not much of a competitor, since Martin’s business
only releases its catering prices to current customers, and Faster Pasta publishes its residential
prices on the web, the covenant would be considered too broad and therefore, does not appear to
protect a legitimate business interest.
Ms. Martin mostly likely does not have a strong claim that, under North Carolina General Statute
§ 75-1, Adams has breached a covenant not to compete that was included in his employment
contract, and the court will most likely not enforce the covenant. With the territory being too
broad and goes against public policy, the covenant would not meet all six of the rules to
determine if the covenant is enforceable with the given facts.
Please let me know if you need further research or have any questions regarding this issue.
Myah