Restrictive provisions in contracts are provisions that prevent someone from acting in a way contrary to the interests of the business.  The main restrictive provisions are listed below, but they can include a variety of other restrictions, as well.  One must be careful in constructing restrictive provisions, as being too overly-broad can result in the provision being deemed unenforceable.

Covenants not to Compete/ Non-compete agreements
Covenants not to compete are agreements that, in exchange for employment and development of the employee or co-owner of a company, that employee or co-owner will not compete against the company while employed or in the future.  The position of an individual at the company impacts the amount of control that can be exerted.  You can restrict a manager more than an employee, and an owner more than a manager.  The more specialized the role, the greater the restriction can be.  As an example, you cannot restrict a plumber to the same degree that you could restrict a nuclear engineer.  The public policy reason behind this is that there are plenty of plumbers, and so the goal seems to be to retaliate against the plumber more than to protect the business, where a more specialized degree can impact the business more if competition arises.  Similarly, time and distance will differ.  It may be acceptable to restrict a plumber from working within 2 miles of the business for a period of a year, but not to restrict the plumber from operating in the metro-Atlanta area.

Non-Solicitation Agreements of Customers or Clients
Non-Solicitation agreements are designed to protect the customer base of a company.  If an employee moves to a new company, they cannot solicit their customers to go with them.  It is important to note that this typically applies to customers that the employee worked with and not of the company as a whole, as the second is often declared overly broad and unenforceable.  However, trade secret restrictions can prevent the employee from accessing and stealing customer lists.

Non-disclosure provisions
A non-disclosure agreement is common after a settlement of a dispute, especially in the employment setting.  In the event that the company does choose to settle a dispute instead of taking it to court, this can prevent bad P.R. and prevent domino / copycat claims.  Of course, if such a settlement is reached, it is always best to put policies into place to address that issue immediately, even if the settlement was reached as a “nuisance money” settlement.

Non-disparagement clauses
Often done with customer disputes, a non-disparagement clause can prevent someone from saying bad things about the company, including leaving negative online reviews.  As an example, if a flooring company offers a full refund for a botched job, they have already made amends for the error they made.  Having a bad review after they resolved the matter to the customer’s satisfaction would be wrong, as the matter was amicably resolved.  The customer is agreeing that they are no longer dissatisfied, so a negative review would not be appropriate.  It is important to note that you cannot require a positive review as a part of a settlement, as doing so violates the rules of most review sites and could get the company blacklisted.  

When a company needs restrictive provisions in a contract or agreement, it is usually best to have an attorney draft the restrictive language.  These provisions are often held to be unenforceable if they are overly broad, unclear, or overly restrictive (against public policy).  To discuss a restrictive agreement, you can schedule an appointment by calling 770-863-8355. We offer a reduced rate of $75 for consultations regarding new matters.