Covenants not to compete take two forms. The first type is found in the sale of a business. To keep the seller of the business from trotting down the street and opening up another business to compete, courts enforce covenants not to compete in these business purchase agreements as long as they are reasonable in length and geographic scope. The questions of time and scope are based in economics; that is, how many dry cleaners can be located within this radius and still find a sufficient customer base? The second type of covenant not to compete is a bit more testy than those found in the sale of a business. This type of covenant applies to employees. Employers require their new hires, as part of their contractual arrangement, to agree not to compete with their employer should they decide to leave their employ. When an owner sells a business, he or she has the income from the sale as a means of a support. When an employee leaves his or her employ, a banishment from that area of doing business, in other words, from using their skills, can be tantamount to a ban on employment. In dealing with these covenants, courts strike a balance between employees' right to work and employers' right to protect the trade secrets, training, and so on, that former employees have and then take with them to another company or use to start a business.

Many companies have their employees sign contracts that include covenants not to compete or covenants not to disclose information about their former employers should the employees leave their jobs or be terminated from their employment. The increase in the number of small businesses and the nature of competition have brought back the issue of noncompete and confidentiality agreements. In dealing with these covenants, courts are striking a balance between the employees' right to work and an employer's right to protect the trade secrets, training, and so forth that the former employee has and then transfers to another company or to himself or herself for purposes of starting a business.....................

 Discussion Questions
1. What is the balance in covenants?
2. What types of covenants are enforced?