Legal Memorandum
MEMORANDUM OF LAW
To: Brenda Young, Supervising Attorney
From: Steven Carp , Legal Assistant
Date: September 26, 2012
Re: Enforcement of non-competition agreement against Brett Young
I.QUESTIONS PRESENTED
Whether the restrictive covenant is enforceable against Brett Young for working with a competitor of Finance R Us.
II. SHORT ANSWER:
No, the covenant is not enforceable against Brett Young for leaving Finance R Us and working for Titles Unlimited when the
III. STATEMENT OF FACTS
Brett Young worked for Finance R Us . His job was to search titles for clients wanting to buy a home. Before he started doing work for Finance R Us, he signed an employment contract with them , part of which contained the following language: “in the event this agreement is terminated, either voluntarily, involuntarily or by mutual consent, that Brett will not engage in a similar or competitive business for himself or for any competitor or in any capacity for any competitor in the state of Maryland for a period of five (5) years from the date this Agreement is terminated in any manner.”
Brett received his assignments from the customer service department. He had no contact with customers as any part of his job. After two years of working for Finance R Us, he received a job offer to do the same type of work at Titles Unlimited. He would again, have no contact with customers and receive his assignments from the customer service department. Finance R Us sues Brett for breach of contract due to violating the restrictive covenant in the employment contract.
IV. APPLICABLE LAW:
Budget Rent A Car v. Raab, 302 A. 2d 11 (Md.1973)
Ruhl v. Barlett Tree Co., 225 A. 2d 288 (Md. 1966)
Millward v. Gerstung International Sport Education Inc., 302 A 2d. 14 ( Md.1972)
V. DISCUSSION AND ANALYSIS:
The general rule in Maryland is that restrictive covenants in a contract of employment by which an employee
To: Brenda Young, Supervising Attorney
From: Steven Carp , Legal Assistant
Date: September 26, 2012
Re: Enforcement of non-competition agreement against Brett Young
I.QUESTIONS PRESENTED
Whether the restrictive covenant is enforceable against Brett Young for working with a competitor of Finance R Us.
II. SHORT ANSWER:
No, the covenant is not enforceable against Brett Young for leaving Finance R Us and working for Titles Unlimited when the
III. STATEMENT OF FACTS
Brett Young worked for Finance R Us . His job was to search titles for clients wanting to buy a home. Before he started doing work for Finance R Us, he signed an employment contract with them , part of which contained the following language: “in the event this agreement is terminated, either voluntarily, involuntarily or by mutual consent, that Brett will not engage in a similar or competitive business for himself or for any competitor or in any capacity for any competitor in the state of Maryland for a period of five (5) years from the date this Agreement is terminated in any manner.”
Brett received his assignments from the customer service department. He had no contact with customers as any part of his job. After two years of working for Finance R Us, he received a job offer to do the same type of work at Titles Unlimited. He would again, have no contact with customers and receive his assignments from the customer service department. Finance R Us sues Brett for breach of contract due to violating the restrictive covenant in the employment contract.
IV. APPLICABLE LAW:
Budget Rent A Car v. Raab, 302 A. 2d 11 (Md.1973)
Ruhl v. Barlett Tree Co., 225 A. 2d 288 (Md. 1966)
Millward v. Gerstung International Sport Education Inc., 302 A 2d. 14 ( Md.1972)
V. DISCUSSION AND ANALYSIS:
The general rule in Maryland is that restrictive covenants in a contract of employment by which an employee
Bibliography: Budget Rent A Car v. Raab, 302 A. 2d 11 (Md.1973) Even though the court held that the restrictive covenant was violated, it affirmed the judgment of the lower court, ruling that the covenant was unenforceable under the circumstances. It ruled that because the employees services as an unskilled worker were not unique and he did not divulge trade secrets, the covenant could not be enforced against him by virtue of undue hardship on the employee. Ruhl v. Barlett Tree Co., 225 A. 2d 288 ( Md. 1966) The appellate court affirmed the lower courts decision that the restrictive covenant was valid because the employee received considerable training from the employer who helped him in business, and that the employee obtained a considerable portion of employer’s clients. In addition, the contract was only for two years, and did not constitute a hardship on employee. Millward v. Gerstung International Sport Education Inc., 302 A 2d. 14 Md (1972) Drawing from cases that upheld enforceability of restrictive covenants they noted : Where “ the personal contact of the employee with the customer is an important factor...”in determining enforceability. Tawney v. Mutual System of Maryland 47 A. 2d 372 (Md. (1946). The competitive value in the marketplace may make a restrictive covenant unenforceable. If the marketplace benefits from the competitive choices