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, Cr.: ograničavajući ugovor/ograničavajuća klauzula) (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 - Income Tax (Earnings and Pensions) Act 2003, Sections 225 to 226, UK [English] - Law of Property Act 1925, Section 84, UK [English] - Restrictive Covenants, Alberta Land Titles, Canada [English]

Case Law - Smith v. Nomad Modular Building Pty Ltd., The Court of Appeal Division of the Supreme Court of Western Australia, 2007 - Pearson v. HRX Holdings Pty Ltd., Federal Court of Australia, 2012 - Tulk v. Moxhay, England and Wales High Court (Chancery Division), 1848 - Aon Risk Servs., N.E. v. Cusack, Supreme Court, New York County, 2011 - BDO Seidman v. Jeffrey Iirshberg, Court of Appeals of New York, 1999 - Merlin Financial Consultants Ltd. v. Cooper, England and Wales High Court (Queen's Bench Division), 2014

Organisations and associations - Ashman, K.J., Swartz, J.M., Lambert, R.L., 2013, Modern Indentured Servitude? A Fresh Look at Employee Restrictive Covenants, American Bar Association (USA) - Restrictive covenants, Department of Transport, Planning and Local Infrastructure (Australia) - Restrictive Covenant, Canada Revenue Agency (Canada)

Online Publications - Coley, Jonathan, Goodwyn, Edward, 2013, Restrictive covenants in employment contracts, - Roberts, Peter, 2014, How to Remove a Restrictive Covenant, Western Canada Business Litigation Blog - Pfleger, Heidi, 2014, Restrictive Covenant Indemnity Insurance, Zurich Legal Indemnities – Gallo, Thomas J., 2011, Georgia’s New Restrictive Covenant Law,


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