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Systems and Software, Inc. v. Barnes

    Brief Fact Summary.

    Systems and Software, Inc. (Systems) sued Barnes for violation of a non-compete employment agreement after Barnes started a consulting group whose single client was a competitor of Systems.

    Synopsis of Rule of Law.

    Contracts that restrain competition are valid and enforceable if the restraint is reasonable.

    Facts.

    Barnes was a consultant for Systems and Software, Inc. (Systems) and signed a non-compete agreement when he started working for Systems. The agreement prohibited Barnes from associating with any business that competed with Systems during his employment and six months after he finished working for Systems. Systems sued Barnes for violation of a non-compete employment agreement after Barnes started a consulting group whose single client was a competitor of Systems. The trial court granted judgment to Systems.

    Issue.

    Whether contracts that restrain competition are valid and enforceable if the restraint is reasonable?

    Held.

    Yes. The judgment of the trial court is affirmed. The terms of the non-compete agreement are enforceable because: (1) Systems served a small client base and the loss of any individual client would be significant; (2) Barnes agreed to the non-compete agreement; (3) monitoring the Barnes’ goodwill serves virtually impossible.

    Discussion.

    There is a three-prong test to determine whether a restraint is reasonable: (1) The restriction should not be greater than what is needed to protect the interests of the employer; (2) the restriction shouldn’t place undue hardship on the employee; (3) the restriction should not injure the public interest.


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