JACKSON LAW FIRM NEWSLETTER
F.B. JACKSON & ASSOCIATES
LAW FIRM, PLLC
ptjj_j@bellsouth.net
Spring, 2015 I
In the area
of contracts law, COVENANTS NOT TO COMPETE arise in several circumstances
including employer-employee settings as well as in the sale of a business. In a recent case entilted, Beverage Systems
of the Carolinas, LLC v. Associated Beverage Repair, LLC; COA14-185, the North Carolina Court of
Appeals discussed several issues that commonly arise out of a covenant not to
compete provision contained in a contract involving the sale of a business, in
this case a beverage company.
- The Plaintiff purchaser required the contract to contain a provision prohibiting the Seller from “competing, owning, managing, operating or controlling, or being connected to someone who has a financial interest in any business in the beverage dispensing or industry in the Carolinas. The prohibition was for five years.
- To be enforceable these type covenants must be (1) reasonable both as to time and territory, (2) reasonably necessary to protect the legitimate interest of the buyer and (3) does not interfere with the public interest.
- The Court found the five years to be reasonable but found the territorial restrictions not to be reasonable.
- The draftsman of the covenant wisely placed a provision in the contract allowing the court to revise the contract to be “reasonable” rather than declare the entire provision “void”.
Keep in mind
that each of these type contract provisions must be judged individually on the
type of business, the product produced and the territory where materials or
services are provided.
This case
also discussed a problem we see in business litigation where one party accuses
another of interfering with their contract rights with a third party. Rather than making an in-depth analysis of
this particular dispute, we thought it might be of more help to at least set
out the elements that could lead to successful litigation: (1) there exists a
valid contract between the person bringing the lawsuit and a third party, (2)
the interfering party knows of the contract, (3) the interfering party
intentionally induces the third person not to perform the contract, (4) and in
doing so acts without justification which (5) results in actual damage to the
person bringing the lawsuit. If you know
a person already has a contract with a third party, you obviously need to be
careful as to what you say. If the
person you are communicating with breaks his contract, you might end up as a
Defendant in a contract interference case.
The
following case was decided by the North Carolina Court of Appeals in July of
2014: Graham v. Deutsche Bank National Trust Company v. Branch Banking and
Trust, COA13-881. When we hear the term
“Trespass” people often think of criminal law, however, there is also a civil
claim for trespass. The civil trespass
claim can be used to “try title to property.”
In this recent case, persons who owned adjoining properties engaged in
litigation when it was discovered that neighbor “A’s” house and septic field encroached on property titled
to neighbor “B”. Neither party had paid for
a survey to be conducted on their respective properties when originally
purchased. However, a potential buyer of
property “A” did have a survey made, which revealed the encroachment. “B” sued “A” to make “A” remove the
encroachments. “A” prevailed as “B”
purchased her property in 1996 and the encroaching house and lot which was constructed
on “A’s” lot were completed in 1994, hence “B” could not prove the first
element of civil trespass that “B” did own or possess her lot when the
alleged trespass occurred. If there
is a moral to this story: “ALWAYS GET A
SURVEY BEFORE YOU BUY!”
On the
domestic front, in Jones v. Jones (COA 14-236) a situation arose where one
spouse, after executing a separation agreement wanted out of the
agreement. The party seeking relief from
the agreement claimed he signed it under duress and undue influence, however
the Court of Appeals found that the spouse seeking relief had “ratified” the
agreement by accepting benefits under the agreement and by performing some of
the terms of the agreement.
We hope
these cases may be of some help to you.
Sincerely,
F.B. JACKSON
and ASSOCIATES LAW FIRM, PLLC staff
