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Publication Date

12-1990

Document Type

Survey Article

Abstract

In 1990 the Georgia General Assembly passed an Act addressing a long-standing debate concerning the proper limits on contracts that restrain parties in their trade, business, or employment. After reaffirming the principle that contracts in general restraint of trade are against public policy and void, the general assembly codified the exception to the rule carved out by the courts. This exception held reasonable restraints on competition in business or employment are partial restraints of trade and are not against public policy. The Act, which became effective on July 1, 1990, amended section 13-8-2 of the Official Code of Georgia Annotated ("O.C.G.A."), and enacted section 13-8-2.1. Section 13-8-2.1 provides definitions, rules, and guidelines for determining whether a particular contract only partially restrains trade and is, therefore, enforceable. Predictably, the legislature modified the strict rules the courts had imposed, requiring a precise statement of the scope, territory, and duration of the noncompetition agreements. The legislature also rejected the courts' refusal to "blue-pencil" or sever the overbroad portions of an offending covenant to arrive at an enforceable prohibition.

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