Definition

Restrictive covenant (Ro.: acord restrictiv/ clauză de confidenţialitate/ neconcurenţă, De.: eine einschränkende Vereinbarung, Fr.: clause restrictive/ de non-concurrence, n.f., Gr.: περιοριστικό συμβόλαιο, Cz.: omezující ustanovení ve smlouvě) (See also: employee choice doctrine, negative covenant, non-compete agreement, positive covenant) = an agreement in which one of the parties imposes a certain behaviour to the other party (or parties). 

It is widely used in the area of property law, in order to prohibit or limit different types of land use, thus setting restrictions on the property exploitation. 

Restrictive covenants can also be found in employment contracts. For instance, they are concluded in order to prevent employees from using vital information connected to the company they leave, after the termination of their contract. In Austrian law, restrictive covenants are inserted and valid throughout the employment contract, as well.

 

Useful links

Legislation 

http://www.legislation.gov.uk/ukpga/2003/1/contents - Income Tax (Earnings and Pensions) Act 2003, Sections 225 to 226, UK [English]

http://www.legislation.gov.uk/ukpga/Geo5/15-16/20/section/84 - Law of Property Act 1925, Section 84, UK [English] 

http://www.servicealberta.com/pdf/ltmanual/RES-1.pdf - Restrictive Covenants, Alberta Land Titles, Canada [English]

Case Law

http://decisions.justice.wa.gov.au/supreme/supdcsn.nsf/PDFJudgments-WebVw/2007WASCA0169/%24FILE/2007WASCA0169.pdf - Smith v. Nomad Modular Building Pty Ltd., The Court of Appeal Division of the Supreme Court of Western Australia, 2007

http://www.austlii.edu.au/au/cases/cth/FCAFC/2012/111.html - Pearson v. HRX Holdings Pty Ltd., Federal Court of Australia, 2012

http://www.bailii.org/ew/cases/EWHC/Ch/1848/J34.html - Tulk v. Moxhay, England and Wales High Court (Chancery Division), 1848

http://law.justia.com/cases/new-york/other-courts/2011/2011-ny-slip-op-52433-u.html - Aon Risk Servs., N.E. v. Cusack, Supreme Court, New York County, 2011

http://www.acc.com/chapters/gny/upload/DOC.PDF - BDO Seidman v. Jeffrey Iirshberg, Court of Appeals of New York, 1999

http://www.bailii.org/ew/cases/EWHC/QB/2014/1196.html - Merlin Financial Consultants Ltd. v. Cooper, England and Wales High Court (Queen's Bench Division), 2014

Organisations and associations

http://www.americanbar.org/publications/gpsolo_ereport/2013/january_2013/modern_indentured_servitude_employee_restrictive_covenants.html - Ashman, K.J., Swartz, J.M., Lambert, R.L., 2013, Modern Indentured Servitude? A Fresh Look at Employee Restrictive Covenants, American Bar Association (USA)

http://www.dpcd.vic.gov.au/planning/theplanningsystem/legislation-and-regulations/restrictive-covenants - Restrictive covenants, Department of Transport, Planning and Local Infrastructure (Australia)

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/sllng/rstrctv/menu-eng.html - Restrictive Covenant, Canada Revenue Agency (Canada)

Online Publications

http://www.out-law.com/page-7086 - Coley, Jonathan, Goodwyn, Edward, 2013, Restrictive covenants in employment contracts, Out-Law.com

http://www.westerncanadabusinesslitigationblog.com/real-estate/how-to-remove-a-restrictive-covenant/ - Roberts, Peter, 2014, How to Remove a Restrictive Covenant, Western Canada Business Litigation Blog

http://www.zurich.co.uk/legalindemnities/news/real_issues_for_real_estate/restrictivecovenantindemnityinsurance.htm - Pfleger, Heidi, 2014, Restrictive Covenant Indemnity Insurance, Zurich Legal Indemnities

http://www.btlaw.com/files/Uploads/Documents/Publications/Tom%20Gallo%20-%20Georgias%20New%20Restrictive%20Covenant%20Law.pdf – Gallo, Thomas J., 2011, Georgia’s New Restrictive Covenant Law, Btlaw.com

Publications

Bevans, N.R., 2008, Real Estate and Property Law for Paralegals, New York, Wolters Kluwer, Aspen Publishers, p.256

Lagesse, P., Norrbom, M., 2006, Restrictive Covenants in Employment Contracts and Other Mechanisms for Protection of Corporate Confidential Information, London, Kluwer Law International, p.131

 

By Alexandra Mureșan