Several different types of contracts can include restrictive covenants. Employers often include restrictive covenants in contracts negotiated with new hires and workers accepting promotions. Business partners often include restrictive covenants in their agreements with one another, especially in a buyout scenario. Restrictive covenants can protect companies when they must negotiate contracts with vendors or service providers.
Restrictive covenants limit the economic activities of another party for a set amount of time even after the working relationship ends. If a business or professional subject to a restrictive covenant violates the terms of an agreement, litigation to enforce the contract may be necessary.
How does litigation help?
Obviously, a civil lawsuit against a former business partner, employee or vendor cannot undo the harm caused by a breach of a restrictive covenant. However, litigation can prevent future misconduct or provide financial relief.
Provided that the plaintiff has evidence of violations of the agreement, they can ask the courts to award damages based on the practical impact of unfair competition, the solicitation of clients or the disclosure of trade secrets.
A civil court judge also theoretically has the power to issue an injunction. They can require that one party cease actions that violate the agreements. They can require specific actions to remedy the issue, such as the removal of information shared online that violates a non-disclosure agreement. Additionally, civil lawsuits serve as an important reminder for others who do business with the company that they must abide by the terms included in restrictive covenants.
Pursuing business litigation is often necessary when seeking to enforce restrictive covenants. Contract breaches may require judicial intervention to be fully resolved. Seeking legal guidance is a good way to get started.