It was noted in Part 1 of this series that Courts prefer the use of non-solicitation clauses to the use of non-competition clauses. As stated, Courts will engage in the following three-part analysis when tasked with determining the enforceability of non-competition clauses in associate agreements:
- Whether there is a proprietary interest worthy of protection;
- Whether the spatial (geographical) and temporal (time) aspects of the clause are reasonable; and
- Whether, in contrast, a non-solicitation clause would adequately protect the principal’s interests. As was noted, in most cases, this is the factor that defeats the enforceability of an otherwise reasonably drafted non-competition clause.
What is a non-solicitation clause? Continue reading
In our last post, we discussed the general prohibition against the enforceability of non-competition clauses in agreements between associates and principals. However, as alluded to in that post, non-competition clauses are also used in agreements of purchase for dental practices, and the Courts have, in contrast, displayed a willingness to enforce non-competition clauses in such transactions. Continue reading
We are routinely consulted by newly graduated dentists concerning their first associate agreement. Their number-one concern is invariably the non-competition clause contained in the agreement. A non-competition covenant attempts to restrict the associate from working within a defined zone surrounding the Principal’s business, for a defined period of time, after the termination of the relationship with the principal. Understandably, new dentists are often apprehensive about signing an agreement with a Principal that restricts them from practicing in any way in the event the relationship fails.
We are also frequently contacted by Principal dentists with concerns that a former associate is in breach of the non-competition clause contained in their associate agreement. The Principal, wanting to protect their business at all costs, is often disappointed in the advice we give them concerning the enforceability of the non-competition clause. Continue reading