Restrictive Covenant

A restrictive covenant is a contractual clause that limits a party's actions in a certain way. Restrictive covenants are often used in employment contracts to prevent employees from competing with their former employer after they leave. They can also be used in real estate transactions to prevent the new owner of a property from making certain changes to the property.

There are two main types of restrictive covenants: those that are reasonable and those that are unreasonable. Reasonable restrictive covenants are those that are necessary to protect the legitimate interests of the party who is imposing the covenant. For example, an employer may be able to impose a restrictive covenant on an employee that prevents them from working for a competitor for a certain period of time after they leave the company. This type of covenant is reasonable because it protects the employer's business from being harmed by the employee's competition.

Unreasonable restrictive covenants are those that are not necessary to protect the legitimate interests of the party who is imposing the covenant. For example, an employer may not be able to impose a restrictive covenant on an employee that prevents them from working in any industry for a certain period of time after they leave the company. This type of covenant is unreasonable because it is not necessary to protect the employer's business.

Restrictive covenants are subject to review by the courts. If a court finds that a restrictive covenant is unreasonable, it will not enforce the covenant. This means that the party who is subject to the covenant will be free to do whatever the covenant prohibits.

It is important to note that restrictive covenants are only enforceable if they are written in a contract. If a restrictive covenant is not in a contract, it will not be enforceable.

Here are some additional things to know about restrictive covenants:

* They can be difficult to enforce.
* They can be challenged in court.
* They can be expensive to defend.
* They can damage your reputation.
* They can limit your future opportunities.

If you are considering entering into a contract that contains a restrictive covenant, you should speak to an attorney to get advice on your rights and obligations.