Reasonable restraint: Overview, definition, and example
What is reasonable restraint?
Reasonable restraint refers to a limitation or restriction that is considered fair, just, and not overly restrictive in a particular context. It is often applied in legal situations, such as contracts, employment agreements, or non-compete clauses, where one party is prevented from certain actions or behaviors (like competing with a business or leaving a job) for a defined period or under specific conditions. The key element of reasonable restraint is that it should be reasonable in scope, duration, and geographical area, ensuring that it doesn’t unfairly limit a person’s rights or freedoms.
For example, a non-compete agreement that prevents an employee from working with a direct competitor for one year after leaving a company may be considered a reasonable restraint if it protects the company’s interests without unduly limiting the employee’s ability to find work.
Why is reasonable restraint important?
Reasonable restraint is important because it helps balance the interests of all parties involved, ensuring that restrictions are not overly burdensome or unfair. In business, for instance, it allows companies to protect sensitive information, trade secrets, and client relationships without violating the rights of individuals. In legal contracts, the use of reasonable restraint prevents the imposition of overly harsh conditions that could be considered unenforceable or unfair by courts.
For employees, businesses, or individuals, understanding reasonable restraint helps ensure that they agree to terms that are fair and legally enforceable. It also prevents potential legal disputes by ensuring that restrictions are clear, fair, and justifiable.
Understanding reasonable restraint through an example
Imagine an employee who signs a non-compete agreement that restricts them from working with a direct competitor for one year after leaving the company. The company might argue that this is a reasonable restraint because it protects confidential information and prevents unfair competition. However, if the non-compete were to last five years or cover a very broad geographic area, it might be seen as unreasonable and therefore unenforceable.
In another example, a business owner might include a reasonable restraint in a contract to prevent a former employee from starting a competing business in the same area within a certain timeframe. If the business is a local restaurant, a six-month restriction within a 50-mile radius may be reasonable. However, a nationwide restriction for several years could be considered excessive.
Example of reasonable restraint clause
Here’s how a reasonable restraint clause might look in a contract:
“The Employee agrees not to engage in or be employed by any business that competes directly with the Company for a period of one year following the termination of employment, within a 50-mile radius of the Company’s principal office, provided such restriction is reasonable to protect the Company’s legitimate interests.”
Conclusion
Reasonable restraint refers to fair and just limitations imposed on individuals or businesses to protect interests such as trade secrets, client relationships, and competitive advantages. The key to reasonable restraint is ensuring that the restrictions are not overly burdensome and are justifiable based on the situation. By understanding what constitutes reasonable restraint, businesses and individuals can agree to fair, enforceable terms that protect both parties’ rights.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.