Podcast Companion — Episode 13: Covenant Not to Compete

Pairs with InglésLegal Podcast, EP13

In employment and corporate law, few clauses generate as much friction as non-compete restrictions. Episode 13 covers the Covenant Not to Compete — a powerful tool, but one that common law courts scrutinize closely.

The Concept

A covenant not to compete is a clause in which a party agrees to refrain from competing with the other for a set period and within a specific scope. In common law, these covenants are enforceable only if reasonable, and courts typically weigh three factors: duration, geographic scope, and the existence of a legitimate business interest, such as trade secrets, confidential information, or customer relationships.

The goal isn’t to eliminate competition altogether — it’s to protect legitimate interests. A restriction that goes too far can be declared unenforceable outright. Non-competes are treated as exceptions to the general freedom to compete, not the default rule.

Applied Example

An executive signs a two-year non-compete limited to a specific region. After leaving, they join a competitor in that same market. The legal question isn’t simply whether they’re competing — it’s whether the restriction itself is reasonable and actually protects a legitimate interest, rather than just suppressing competition for its own sake.

Key Expressions from This Episode

Restrictive covenant
Meaning: a contractual promise limiting a party’s future conduct, such as competing or soliciting clients.
Spanish equivalent: pacto restrictivo

Scope
Meaning: the range of activities, duration, and geography a restriction actually covers.
Spanish equivalent: alcance

Reasonableness
Meaning: the standard courts use to determine whether a restriction is enforceable given its duration, geography, and purpose.
Spanish equivalent: razonabilidad

Professional Tip

Match the duration to the employee’s actual role, limit the geographic scope to the relevant market, and clearly identify the legitimate business interest being protected. Coordinate the non-compete with confidentiality and non-solicitation clauses, and be aware of the “blue-pencil doctrine” some courts use to trim an overbroad clause rather than void it entirely. An aggressive clause can look protective and still end up useless in court.

Why It Matters

Overreach is the single most common way these clauses get invalidated. For anyone drafting or reviewing employment agreements, proportionality — not aggressiveness — is what actually makes a non-compete hold up.

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For the full discussion, including a model covenant-not-to-compete clause, listen to Episode 13 — Covenant Not to Compete — on the InglésLegal podcast.