A Guide to Drafting Noncompetition Agreements in Georgia   Tags: covenant_not_to_compete, georgia, hb_173, research, restrictive_covenant  

Covenants not to compete have existed for hundreds of years. Prior to 1711, agreements not to compete were considered against public policy. In 1711, an English court, in Mitchel v. Reynolds, overruled that long line of precedent to allow reasonable agreements not to compete, provided they were accompanied by satisfactory consideration. This framework was adopted by most States; covenants not to compete were against public policy and void unless they were deemed reasonable.

Georgia follows this approach, as well, and has devised a three element test to determine the reasonableness of covenants not to compete. First, these agreements cannot impose excessive geographic limitations on a person's ability to seek work. Second, the duration of the covenant must be reasonable. Finally, covenants not to compete cannot prohibit all competitive activity, but must be limited in scope as to the activities prohibited.

Covenants not to compete tend to evolve with business and market conditions. However, the Georgia constitution restricts the manner in which businesses may successfully draft employment agreements containing covenants not to compete and ties the hands of courts in enforcing them. The General Assembly, recognizing this immutability, passed new restrictive covenant laws in 2009, which recently became effective after voters approved the measures as a constitutional referendum in the November 2010 election. The new laws in part codify existing precedent but also enumerate several changes. Among these are presumptions for reasonableness in certain situations and, perhaps most important, courts are now permitted to modify covenant agreements to make them enforceable.

The impact of the new laws has not yet been felt. This Guide provides a look at case precedent prior to the passage of the new laws and examines the likely effect the new laws will have on covenants not to compete in Georgia.

This Research Guide provides a broad introduction to the current state of Georgia law regarding noncompetition agreements and covenants not to compete. It also provides annotations of several resources—law review articles, form books, encyclopedia articles, etc.—that will instruct a reader in the basic tenants of noncompetition agreements. The world of covenants not to compete is expansive; these covenants appear in many types of agreements and contractual relationships. This Guide is focused on the most common type of noncompetition agreement: covenants not to compete or solicit built into employment contracts.

This research guide is a broad starting point for research into noncompetition covenants in Georgia. Such agreements must be tailored to individual employer/employee or business needs. This guide should not be considered as legal advice or as a legal opinion on any specific facts or circumstances. If you need further assistance in researching this topic or have specific legal questions, please contact a reference librarian in the Georgia State University College of Law library or consult an attorney.

Bibliographies on this Web site were prepared for educational purposes by law students as part of Nancy P. Johnson's Advanced Legal Research course. The Law Library does not guarantee the accuracy, completeness, or usefulness of any information provided. Thorough legal research requires a researcher to update materials from date of publication; please note the semester and year the bibliography was prepared.

Daniel Hendrix is a third year law school student at Georgia State University Law School. He serves as Research Editor on the Georgia State Law Review. This Research Guide was prepared for Professor Nancy Johnson's Advanced Legal Research Class for the Fall 2010 semester.