Define: Covenant Not To Complete

A covenant not to compete, also known as a non-compete agreement or restrictive covenant, is a contractual provision in which one party agrees not to engage in certain competitive activities, such as working for a competitor or starting a competing business, for a specified period of time and within a defined geographic area. These agreements are often used in employment contracts to protect a company’s trade secrets, confidential information, customer relationships, and goodwill. By signing a covenant not to compete, an employee agrees to refrain from competing with their employer for a certain period after leaving the company, thereby safeguarding the employer’s interests. However, non-compete agreements must be reasonable in scope, duration, and geographic limitation to be enforceable, as courts may invalidate overly broad or oppressive restrictions that unduly limit an individual’s ability to earn a living.

A clause in an agreement where one party promises not to offer to sell or produce the same goods and services within a specified geographic area of the other party. Also called a non-compete clause or covenant.

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This glossary post was last updated: 29th March, 2024.