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Restraint of Trade

Published December 11, 2018 Author: Andrew Felix Rose

A clause in an employment agreement that helps protect the commercial viability of a business by placing restrictions on what a former employee can or cannot do after they stop working for that employer.

The two most common restraint of trade clauses are non-competition and non-solicitation.

  1. Non-competition: Prevents a former employee from working for a competitor in a field or industry similar to their former employer’s business.
  2. Non-solicitation: Allows an employee to work for a competitor in a similar field or industry, but they cannot contact the former employer’s clients to talk about the new business they work for.

The terms of a restraint of trade clause must be reasonable in order to be enforced.

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