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Restrictive covenants in a contract of employment, by which an employee as a part of his agreement undertakes not to engage in a competing business or vocation with that of his employer on leaving the employment, will be sustained if the restraint is confined within limits which are no wider as to area and duration than are reasonably necessary for the protection of the business of the employer and do not impose undue hardship on the employee or disregard the interests of the public.
The appellee, The F. A. Bartlett Tree Expert Company, and appellant David Ruhl executed a written contract of employment, under which appellant agreed not to compete with appellee for a period of two years after the termination of his employment within the area of five Eastern Shore counties and a contiguous county in Delaware, the territory in which appellant worked for appellee. Subsequently, appellant established a competing business. Appellee sued to enforce the noncompetition covenant. The trial court held that the covenant was valid. Appellant challenged the decision, claiming that appellee breached the covenant by reducing appellant's commission.
Was the noncompetition covenant valid and enforceable?
The court affirmed, explaining that a noncompetition covenant would be upheld if it was reasonable as to area and duration, was necessary to protect the employer's business, and did not impose an undue hardship on the employee. Appellant derived two-thirds of his business from appellee's former customers, so the court held that the covenant was necessary to protect appellee's business. The enforcement would impose hardship on appellant, because he lived in the area it covered and had experience in only one business. However, because appellant received considerable training from appellee that increased his proficiency in that business, and because the covenant was effective for only two years, the hardship was insufficient to invalidate it.